The raw material quantity variance can be determined by:
A) an excess RM issue notice
B) a RM returned notice
C) both a and b
D) none of the above

Question

Quizplus · Accepted Answer

The raw material quantity variance refers to the difference between the actual amount of raw material used in the production process and the standard quantity that should have been used.

An excess RM issue notice is a report that highlights the issuance of more raw material than is required for production. This results in an unfavorable raw material quantity variance as it increases the cost of production unnecessarily.

On the other hand, an RM returned notice pertains to raw material that has been returned to the inventory for various reasons, such as being of poor quality or not meeting the required specifications. This may result in a favorable or unfavorable raw material quantity variance, depending on the reason for the return.

Therefore, to calculate the raw material quantity variance accurately, both the excess RM issue notice and the RM returned notice must be taken into account. The raw material quantity variance formula can then be applied to determine the actual variance.

The Raw Material Quantity Variance Can Be Determined By