Material

The two basic variances arising during material consumption are material
usage and material price variances. The former arises because of variations in the quantity of
material actually consumed when compared with what should have been consumed as per the
established standards and the latter because of the differences between the planned and the
actual material prices paid to the suppliers. Mathematically
Material usage variance = Std. price (Std. Qty. – Acutal qty.)
Material price variance = Actual qty. (Std. price – Actual price)