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Variance is a word which refers to the degree of fluctuation between the actual and scheduled performance. In terms of materials, when actual costs incurred for direct materials is compared with the expected costs then the difference obtained is known as material variance. In Material Variances Assignment Help, it is given that definition related to material is necessary for determination of the ability of a business to incur material costs close to the levels which has been planned to incur them. It is possible for the expected material cost to be a negotiated figure or a figure which is based on certain purchase volume and thus renders the variance less usable. According to materials, the variance can also be divided into two types- material price variance and purchase price variance. The term purchase price variance deals with the price at which the direct materials were bought and the material price variance is the term related to the total units of the materials that are used in the production process. Apart from the definition in terms of materials, there is another definition which is explained in Material Variances Assignment Help. Material Variance can be defined in terms of size of the variance where a variance is considered to be material if it exceeds a certain percentage or dollar amount. This is commonly used by the auditors who require explanations regarding all the variances exhibiting a necessary change from the preceding year. The concept of material variance is to consider a transaction material if the presence or absence would alter the decision of a customer’s usual financial statements.
Advantages and Disadvantages of Material Variances
There are several advantages of Material Variances out of which some are enlisted below in Material Variances Assignment Help
• It is the material variances by the help of which the company can set standards for each type of cost incurred that would contribute in improving the company’s cost control.
• The material variances develop appropriate cost standard and succeeds in controlling product costs. The future cost of the material should also be close to the standard cost or the market value.
• In Material Variances Assignment Help, it is given that the Material Variances are more reasonable and are easier inventory measurements than actual cost systems. It also helps in cost savings i.e. use of standard cost causes employee to become more cost conscious.
Apart from the above advantages, there are various disadvantages which are enlisted below in Material Variances Assignment Help
• Material Variances lead to controversial materiality limits which involves individual judgment or many other problems. It is the responsibility of the manager to determine the constitution of a material or unusual variances.
• Due to strict variance analysis budgeting, there is often delay in decision making process of the management. It is one of the major disadvantages of material variances. To know more about material variances, refer Material Variances Assignment Help.
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