Direct Material Usage Variance | Meaning | Formula | Causes

Direct Material Usage Variance

Direct material usage variance is otherwise called as Direct Material Quantity variance. It is a part of direct material cost variance. According to ICMA, London,

“It is that portion of material cost variance which is due to the difference between standard quantity specified and actual quantity used”.

Formula to find Direct material usage variance

The following formula is used to calculate direct material usage variance.

MUV = SP (SQ — AQ)


  • MUV = Material Usage Variance
  • SP Standard Price
  • SQ Standard Quantity for actual output
  • AQ = Actual Quantity

If the standard quantity for actual output is more than the actual quantity, the variance will be favorable; and on the other hand, if standard quantity for actual output is less than the actual quantity, the variance will be unfavorable or adverse.

Causes for Direct Material Usage Variance.

The management should take necessary steps to prevent the material usage variance.

1. Negligence in use of materials.

2. More wastage of materials by untrained workers.

3. Adopting defective or wring or improper production process.

4. Loss due to pilferage.

5. Use of material mix other than the standard mix.

6. Using of poor or bad quality of materials.

7. Carelessness and inefficiency of workers.

8. More or less yield from materials than the standard set.

9. Lack of skill of the employees leads to more consumption of materials.

10. Defective production necessitating the use of additional materials.

11. Improper condition of Plant and Equipment.

12. Defects in machinery during the process of production.

13. Bad maintenance and upkeep of plant lead to more scraping materials.

14. Frequent changes in product design.

15. Lack of proper inspection and supervision of materials lead to more consumption of materials.

16. Changes in the materials mix.

17. Accounting mistakes such as non-recording of materials returned to stores and/or inter transfer to various jobs etc.