Between the actual cost and the standard cost for the actual output or the direct material consumed as a quantity.

The difference of direct material cost can be divided into two types: price difference and quantity difference.

(1) price difference

Actual consumption materials are calculated and measured according to actual price.

There are many reasons for the price difference of direct materials, such as changes in market prices, changes in sources of material procurement, size of order quantities, modes of pportation and channels, quantity discounts, emergency orders, etc. any price deviation from the predetermined requirements will result in price differences.

Therefore, the formation and responsibility of the price difference of direct materials should be analyzed according to the specific circumstances, some of which are external reasons, others belong to the responsibility of the enterprises themselves.

Any discrepancy arising from the procurement work shall be the responsibility of the procurement department, or the discrepancy arising from the causes of production. If an urgent order is placed, the production department shall be responsible for the discrepancy.

Only by clarifying the reasons and dividing responsibilities can we play a proper role in the calculation and analysis of price differences.

(2) quantitative difference

The cost difference between the actual consumption of material and the standard consumption quantity calculated by standard price.

There are many factors that affect the quantity difference of direct materials. For example, technological innovation, comprehensive utilization, repairing old and useless, improving the formulation and reasonable blanking are all ways to reduce material consumption, and waste loss, running leakage, large quantity of useless materials and inferior quality are the important reasons for improving material consumption.

The quantity difference of direct materials is usually formed in the process of production, which is generally responsible for the production department.

But sometimes it may be caused by the procurement work, such as the increase of consumption amount caused by the purchase of poor quality materials, and the resulting unfavorable differences should be the responsibility of the purchasing department, not the production department.

If there is any substitute material or mixed material, the quantity difference of direct materials can be further decomposed, and the difference between structure and output can be calculated.