Standard costing

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jigar samani (Querist)
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17 February 2014 Hello,

Can anyone explain me that in formula of Material Usage Variance i.e. (SQ-AQ)*SP why we multiply with standard price??

What is the logic behind that?? please explain in detail.

Thanks in advance

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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18 February 2014 Since the effect of any variation in material price from the standard is calculated in the material price variance, material usage variance is calculated using the standard price. - See more at: http://accounting-simplified.com/management/variance-analysis/material/usage.html#sthash.NI4668SK.dpuf

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