Price difference = (actual price-standard price) × actual consumption.

The focus of price difference is price, so it is actual consumption multiplied by price difference (actual price minus standard price), while the focus of consumption difference is consumption, so it is consumption difference (actual consumption minus standard consumption) multiplied by standard price.

This method is also suitable for calculating the formulas of direct labor cost difference and variable manufacturing cost difference, but it should be clear that direct labor cost difference is price difference, wage rate difference is dosage difference, variable manufacturing cost difference is price difference, and variable manufacturing cost efficiency difference is dosage difference.

Reasons for direct material cost variance:

There are many reasons for the direct material price difference, such as the change of market price, the change of material procurement source, the size of order batch, the difference of transportation mode and mode, the discount of available quantity, emergency order, etc. When setting the standard cost, any deviation from the predetermined requirements will lead to price differences.

Therefore, the formation and responsibility of direct material price difference should be analyzed according to the specific situation, some of which belong to external reasons and some belong to the responsibility of the enterprise itself.

The purchasing department is responsible for all the differences caused by purchasing work, and some of them are caused by production reasons. In case of urgent orders, the production department should be responsible. Only by clarifying the reasons and responsibilities can the calculation and analysis of the price difference play its due role.