# 10 a favorable direct materials quantity variance indicates which of the following? Ideas

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terial (DM) Quantity Variance | Definition, Formula & Example

Direct materials quantity variance is a part of the overall materials cost variance that occurs due to the difference between the actual quantity of direct materials used and the standard quantity allowed for the output.

Direct materials quantity variance is also known as direct material usage or volume variance. It indicates whether or not the material has been properly utilized.

A favorable materials quantity variance indicates savings in the use of direct materials. An unfavorable variance, on the other hand, indicates that the amount of materials used exceeds the standard requirement.

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## Example: How to Calculate Direct Materials Quantity Variance

The Blue Sky Company provides the following data for the month of June 2016:

• Direct materials used: 4,000 units
• Standard quantity allowed: 4,200 units
• Standard price per unit of direct materials: \$5

Required: Calculate the direct materials quantity variance for Blue Sky Company. Indicate whether it is favorable or unfavorable.

### Solution

The direct materials quantity variance of Blue Sky Company, as calculated above, is favorable because the actual quantity of materials used is less than the standard quantity allowed.

### How is the direct material quantity variance calculated?

The direct materials quantity variance can be calculated as follows:
Quantity of Direct Materials Used (4,000 units) – Standard Quantity Allowed (4,200 units) = Direct Material Quantity Variance (200 units unfavorable)

### If a company’s actual quantity used exceeds the standard allowed, what would the variance be?

If a company’s actual quantity used exceeds the standard allowed, then the direct materials quantity variance will be unfavorable. This means that the company has utilized more materials than expected and may have paid extra in materials cost.

### How is direct material usage variance calculated in a multi-product company?

In a multi-product company, the total quantity variance is divided over each of the products manufactured. This will result in a product usage variance for each unit produced.

### What is meant by standard direct material usage?

Standard direct material usage refers to the amount of materials allowed to be used per unit produced. It may also refer to the amount expected under normal circumstances.

### How is direct materials price variance calculated?

A direct materials price variance can be calculated as follows:
Actual Direct Materials Price (per unit) – Standard Direct Materials Price (per unit) = Direct Materials Price Variance (Unfavorable or Favorable)

## About the Author True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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## Extra Information About a favorable direct materials quantity variance indicates which of the following? That You May Find Interested

If the information we provide above is not enough, you may find more below here.

### Direct Material (DM) Quantity Variance – Finance Strategists

• Author: learn.financestrategists.com

• Rating: 3⭐ (174238 rating)

• Highest Rate: 5⭐

• Lowest Rate: 1⭐

• Sumary: Direct materials quantity variance is a part of the overall material cost variance which occurs because of the difference between the actual quantity of direct material used and standard quantity allowed for the output.

• Matching Result: A favorable materials quantity variance indicates savings in the use of direct materials. An unfavorable variance, on the other hand, …

• Intro: Direct Material (DM) Quantity Variance | Definition, Formula & Example Direct materials quantity variance is a part of the overall materials cost variance that occurs due to the difference between the actual quantity of direct materials used and the standard quantity allowed for the output. Direct materials quantity variance is…

### How to Calculate Materials Quantity Variance – The Motley Fool

• Author: fool.com

• Rating: 3⭐ (174238 rating)

• Highest Rate: 5⭐

• Lowest Rate: 1⭐

• Sumary: Materials quantity variance determines the production efficiency of converting raw materials into finished goods. Learn how to calculate it to uncover issues.

• Matching Result: A materials quantity variance compares the actual and expected direct material used in manufacturing a product.

• Intro: A Guide to Understanding Materials Quantity Variance Image source: Getty Images Expectations don’t always line up with reality. When your manufacturing business uses more or less material than expected, quantify it with the materials quantity variance. Reality doesn’t always line up with expectations. Think back to the last Big Mac…

## Frequently Asked Questions About a favorable direct materials quantity variance indicates which of the following?

If you have questions that need to be answered about the topic a favorable direct materials quantity variance indicates which of the following?, then this section may help you solve it.

### An advantageous direct materials cost variance means what?

Favorable direct material cost variance occurs b>when the company had savings or incur costs that are less than what is budgeted/b>. That would occur when the actual costs of the material purchases are less than the company’s budgeted or standard costs for that direct material.

### Quizlet: What does a positive direct materials cost variance mean?

Which of the following is true when there is a favorable direct materials price variance? b>The standard cost of materials purchased was greater than the actual cost of materials purchased.

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### What is the variation in the quantity of direct materials?

Direct materials quantity variance, also known as direct material usage or volume variance, is a component of the overall materials cost variance that develops as a result of the discrepancy between the actual quantity of direct materials used and the standard quantity permitted for the output.

### Which of the following explanations for a positive direct materials quantity variance is most likely?

b>Purchased materials in bulk and received a quantity discount” would be a plausible explanation for a favorable direct materials quantity variance, right?

### What does a positive variance signify?

A positive variance occurs when actual income exceeds budget or actual expenses fall short of plan, which is the same as a surplus when actual expenses fall short of available income.

### What does “favorable variance” mean?

Favorable variances can be the result of increased manufacturing efficiencies, lower material costs, or higher sales. Favorable variances occur when the cost to produce something is lower than the budgeted cost, which indicates a business is making more profit than initially anticipated.

### How can you tell whether a materials quantity variance is positive or negative?

When you use more material than expected or less material than planned, you have a favorable materials quantity variance. A materials quantity variance compares the actual and expected direct material used in manufacturing a product.

### What exactly is the quizlet on direct materials quantity variance?

The materials price variance is calculated by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased. Terms in this set (15) A direct materials quantity standard typically includes an allowance for waste.

### What kind of variance would you deem to be in your favor?

For instance, if a business anticipated paying around 00,000 for equipment maintenance but was able to negotiate a price of 5,000, they’ll have a favorable variance of 5,000. Favorable variance is a difference between planned and actual financial results that is in favor of the business.

### Quiz: What does a positive variance mean?

Paying a lower price than anticipated for direct materials is an example of a favorable variance (F), which happens when actual costs are less than budgeted or standard costs.

### What exactly does “favorable variation” mean?

A variance should be properly classified as favorable or unfavorable; a favorable variance occurs when revenue exceeds budget or when expenses are lower than anticipated, which could lead to higher income than was initially projected.