Which of the following is incorrect for material variances?

The correct answer is D. MYV = SC per unit (AY – SY).

Material variances are calculated by comparing the actual costs of materials used to the standard costs of materials used. The three main types of material variances are:

• Material price variance (MPV): This is the difference between the actual price paid for materials and the standard price per unit of material. It is calculated as follows:

MPV = (AQ × AP) – (SQ × SP)

where:

• AQ = Actual quantity of materials used
• AP = Actual price per unit of material
• SQ = Standard quantity of materials allowed for actual production

• SP = Standard price per unit of material

• Material quantity variance (MQV): This is the difference between the actual quantity of materials used and the standard quantity of materials allowed for actual production. It is calculated as follows:

MQV = AP(SQ – AQ)

• Material usage variance (MUV): This is the difference between the actual cost of materials used and the standard cost of materials allowed for actual production. It is calculated as follows:

MUV = MCV + MQV

where:

• MCV = Material cost variance
• MQV = Material quantity variance

The formula for material usage variance (MUV) does not include the standard cost per unit of material (SP). This is because the standard cost per unit of material is not relevant to the calculation of MUV. The MUV is calculated by comparing the actual cost of materials used to the standard cost of materials allowed for actual production. The standard cost of materials allowed for actual production is calculated by multiplying the standard quantity of materials allowed for actual production by the standard price per unit of material. The standard price per unit of material is not relevant to the calculation of MUV because it is not used to calculate the standard cost of materials allowed for actual production.