What is the Material Cost Variance What is the Material Cost Variance?

Material cost variance is the difference between the actual cost of the material and the planned cost. The actual cost is greater than the planned ** cost is an overrun; The actual cost is less than the planned ** cost for the savings. The difference in the material cost of purchased materials reflects the quality of the work of the material procurement business to a certain extent.

Material Cost Variance Calculation Formula:

Material Cost Variance = Actual Cost - Planned Cost.

The difference is a positive number, which means that the actual is large, and it is called"Overrun differences"(debit); The difference is a negative number, which means that the actual is small, and it is called"Poor savings"(Credit).When a material is issued, the planned cost is carried forward and then adjusted to the actual cost.

The formula is transformed to:

Actual Cost = Planned Cost + Material Cost Variance.

In this equation, the material cost difference is added if it is a positive number and subtracted if it is a negative number.

Material cost variance rate.

Balance material cost difference at the beginning of the month + Difference in material cost of this month's revenue) (planned cost of materials at the beginning of the month + planned cost of this month's revenue materials) * 100%.

Accounting for material cost variances:

The accounting of material cost difference is an important part of inventory accounting, one of the key and difficult points of industrial accounting business accounting, and also a difficult point in accounting practice. How to improve the effect of this part of learning and application, the following is a rough **.

Clarify the content of material cost variance accounting.

According to the current accounting system, the material cost difference is the difference between the actual cost of materials and the planned cost under the method of valuing materials according to the planned cost. However, the materials referred to here are not only the contents of the "raw materials" account. Packaging and low-value consumables are also included.

Two parts. However, the material cost difference does not account for all the contents of the inventory, and the setting of the sub-ledger is consistent with the material purchase account, that is, the raw materials, packaging materials, and low-value consumables are accounted for.

Clarify the intrinsic relationship between material cost variances and related accounts.

Raw materials, packaging materials, and low-value consumables are valued at planned cost, which means that their income, issuance, and balance are all valued at planned cost. However, according to the Accounting Standards for Business Enterprises.

requirements, accounting.

The general principles of historical or actual costing must be followed, so that the revenue from raw materials, packaging, low-value consumables, and planned costs issued must be adjusted to actual costs at the end of the month. "Material Cost Variance" is an adjustment account that reflects the actual cost of raw materials, packaging and low-value consumables through the increase and decrease of "raw materials", "packaging materials" and "low-value consumables", so as to comply with the general principles of accounting.

The official website of Global Ivy League Education

The structure of the material cost difference account should be recorded in this way, that is, when the warehouse is "borrowed over the credit section", and when the warehouse is out of the warehouse, "the loan is over-debited", that is to say, if there is an overrun difference when the warehouse is put into storage, then it is written to the debit, and if there is a savings difference, it is written to the credit, if it is out of the warehouse? It's the exact opposite.

What does the material cost variance mean?

Accounting entries for raw materials accounted for using the planned costing method.

1.Enterprises buy raw materials.

1) The company purchases materials.

Borrow: Material Purchase (Record Actual Cost).

Tax Payable – VAT payable (input tax).

Credit: Bank Deposits, Cash on Hand, Accounts Payable.

2) Acceptance materials and warehousing.

Borrow: Raw materials (record planned costs).

Material Cost Variance (Overrun Variance: Actual Cost > Planned Cost) Credit: Manuscript Material Purchase (Record Actual Cost).

Material Cost Variance (Savings Variance: Actual Cost "Planned Cost") 2The enterprise issues raw materials.

1) The enterprise produces and receives materials.

Borrow: Production Costs, Manufacturing Expenses, Administrative Expenses.

Material cost variance (savings variance).

Credit: Raw materials (planned costs).

Material cost variance (overrun variance).

2) The cost of material carry-over of the enterprise.

Borrow: Other operating costs.

Material cost variance (melody difference).

Credit: Raw materials (planned into key code sheds).

Material cost variance (overrun variance).

3) Consignment processing and delivery of materials.

Borrow: commissioned processing materials.

Material cost variance (savings variance).

Credit: Raw materials (planned costs).

Material cost variance (overrun variance).

This has to be combined with the topic, for example: the planned cost of raw materials for a company at the beginning is 300,000 yuan, and the material cost difference is +5,000 yuan (overrun); The planned cost of raw materials purchased this month is 400,000 yuan, and the difference in material cost is -19,000 yuan (saving); The planned cost of the materials to be sent out this month is $500,000.

This is an accounting that involves material cost variances.

Calculate the variance rate for the cost of materials shipped this month.

1. Calculate the material cost difference rate for this month.

Material cost difference to be borne by materials issued this month:

2. When receiving raw materials.

Borrow: Production cost 500,000

Credit: Raw Materials: 500000

3. At the end of the month, the difference in the cost of raw materials will be settled.

Borrow: Production cost -10000

Credit: Material cost variance -10000

After the calculations:

The actual cost of materials issued this month is 500,000 + (-10,000) = 490,000

The planned cost of the material balance for this month is 300000+400000-500000=200000

The difference in the cost of the material balance for this month is 200,000*(-2%)=-40,000

The actual cost of the material balance this month is 200,000 + (-40,000) = 196,000

A few formulas: 1) Material Cost Variance Rate = (Balance Material Cost Difference at the Beginning of the Month + Revenue Material Cost Variance for the Month) (Planned Cost of Materials Balance at the Beginning of the Month + Planned Cost of Revenue Materials for the Month).

2) The difference in the cost to be borne by the issued material = the planned cost of the issued material * the difference in the cost of the material.

3) The actual cost of the issued material = the planned cost of the issued material + the cost difference of the issued material.

4) The actual cost of materials at the end of the period = the actual cost of materials at the beginning of the period + the actual cost of materials in the current period - the actual cost of materials issued in the current period.

Do you want to ask about warehousing or outgoing?

What does the material cost variance mean?