The sum of the material price and material usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.

Question

Quizplus · Accepted Answer

The material price variance reflects the difference between the actual price paid for materials and the budgeted price, while the material usage variance reflects the difference between the actual quantity of materials used and the budgeted quantity. Therefore, the sum of these variances will give us the total materials variance only if the materials purchased is equal to the materials used. Otherwise, there may be other factors involved in the total materials variance, such as waste or spoilage.

The Sum of the Material Price and Material Usage Variances