WHITE CELLS ARE ADJUSTABLE

Kristoffer Burnett - Certified Management Accountant, 2009-2011

Direct Material Variance Example

Total Direct Materials Variance
Actual Results
Cost

Units

Direct materials consumed

DM1
DM2
DM3
DM4
DM5
DM7
DM8
DM9
DM10
Total

112,575
67,722
71,315
92,889
278,940
67,420
68,986
50,435
351,138
1,161,420

2.19
6.54
6.83
8.47
5.08
1.31
7.34
4.95
1.68

Total
246,539
442,902
487,081
786,770
1,417,015
88,320
506,357
249,653
589,912
$ 4,814,550

112,575
67,722
71,315
92,889
278,940
67,420
68,986
50,435
351,138

2.16
6.74
6.74
8.99
4.75
1.28
7.44
5.18
1.67

2.16
6.74
6.74
8.99
4.75
1.28
7.44
5.18
1.67

Total
$

268,099
501,941
520,220
925,179
1,396,999
93,132
556,973
296,798
617,718
$ 5,177,060

DM Quantity Variance

Total DM Variance

DM Quantity Variance

3,377
(13,544)
6,418
(48,302)
92,050
2,023
(6,899)
(11,600)
3,511
27,034

(24,937)
(45,495)
(39,557)
(90,107)
(72,034)
(6,834)
(43,717)
(35,545)
(31,318)
$ (389,544)

Actual Total
Input
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420

(21,560)
(59,039)
(33,139)
(138,409)
20,016
(4,811)
(50,616)
(47,145)
(27,806)
$ (362,509) Negative variances are favorable, costs were less than planned

Actual
Mix

Budgeted
Cost

9.7% $
5.8%
6.1%
8.0%
24.0%
5.8%
5.9%
4.3%
30.2%

2.16
6.74
6.74
8.99
4.75
1.28
7.44
5.18
1.67

Total

Total
$

243,162
456,446
480,663
835,072
1,324,965
86,298
513,256
261,253
586,400
$ 4,787,516

Actual Total
Input
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420
1,161,420

Budgeted
Mix

Budgeted
Cost

9.9% $
6.0%
6.2%
8.2%
23.6%
5.8%
6.0%
4.6%
29.6%

2.16
6.74
6.74
8.99
4.75
1.28
7.44
5.18
1.67

Budgeted
Total Input

Total
$

249,579
467,268
484,284
861,269
1,300,497
86,698
518,499
276,296
575,047
$ 4,819,438

Budgeted
Mix

1,247,602
1,247,602
1,247,602
1,247,602
1,247,602
1,247,602
1,247,602
1,247,602
1,247,602

2.16
6.74
6.74
8.99
4.75
1.28
7.44
5.18
1.67

Total
$

268,099
501,941
520,220
925,179
1,396,999
93,132
556,973
296,798
617,718
$ 5,177,060

DM Yield Variance

DM Quantity Variance

Total

(6,417)
(10,822)
(3,621)
(26,197)
24,468
(401)
(5,243)
(15,043)
11,353
(31,922)

(18,520)
(34,673)
(35,936)
(63,910)
(96,502)
(6,433)
(38,475)
(20,502)
(42,671)
$ (357,622)

Dropdown menu

DM Quantity Variance Breakdown

Total DM Variance Breakdown

$5,000

$0

($5,000)
$11,353

($10,000)

($15,000)
($42,671)

($20,000)

($25,000)

($30,000)

($35,000)
DM10

DM Price Variance

Budgeted
Cost

9.9% $
6.0%
6.2%
8.2%
23.6%
5.8%
6.0%
4.6%
29.6%

DM Mix Variance
Variance analysis
DM1
DM2
DM3
DM4
DM5
DM7
DM8
DM9
DM10

DM10

124,120
74,472
77,184
102,912
294,105
72,759
74,862
57,297
369,891
1,247,602

DM Price Variance

Total

ITEM TO CHART:

Units

243,162
456,446
480,663
835,072
1,324,965
86,298
513,256
261,253
586,400
$ 4,787,516

Direct materials consumed

DM1
DM2
DM3
DM4
DM5
DM7
DM8
DM9
DM10

Static Budget
Cost

Total
$

Variance analysis
DM1
DM2
DM3
DM4
DM5
DM7
DM8
DM9
DM10

$10,000

Flexible Budget
Cost

Units

DM Quantity Variance

Total DM Variance

DM Mix Variance

Notes:
1 Note that the DM variances focus on those materials that were consumed . Contrast this with the flexible budget, which focused on materials purchased .
2 The DM Price Variance measures the effect on Total DM Variance due to differences in budgeted and actual DM unit costs. This is similar to the purchase
price variance which measures the difference in unit costs for all units purchased, not just those consumed.
3 The DM Quantity Variance measures the effect on Total DM Variance due to differences in budgeted and actual DM quantities consumed.
4 Actual Results - Static Budget OR DM Price Variance + DM Quantity Variance.
5 Mix = individual units / total units.
6 The DM Mix Variance measures the effect on the DM Quantity Variance due to differences in budgeted and actual mix.
7 The DM Yield Variance measures the effect on the DM Quantity Variance due to differences in budgeted and actual total input.
8 DM Mix Variance + DM Yield Variance.

DM Yield Variance

(24,937)
(45,495)
(39,557)
(90,107)
(72,034)
(6,834)
(43,717)
(35,545)
(31,318)
$ (389,544) Negative variances are favorable, costs were less than planned