An accounting term used in standard costing to measure the difference between the actual cost of direct materials and the standard cost, identifying favorable or adverse variances that affect budgeted profit.
Materials variances measure the differences between expected and actual costs related to direct materials used in the production process. These variances help in controlling and analyzing cost efficiency and effectiveness in manufacturing.
Understand the concept of Standard Purchase Price, a predetermined price set for each commodity of direct material for a specified period, used in a system of standard costing.
