acct511-3

Difference between the total direct material cost and the flexible budget amount

Difference between the actual and standard cost per unit of direct material multiplied by the quantity of direct materials used during the project. It can be misleading, as cheaper materials could lead to more downstream problems; buying in bulk has an impact too, as it might look good but represent higher warehousing costs

• not taking purchasing (bulk) discounts
• unexpected price changes
• changes in freight costs
• variations in grades of materials

The ratio of quantity used over quantity purchased