What Are Materials Variances? And What Are Carryovers?
‘Materials Variances’ is the difference between the planned quantity of materials required to produce a quantity of output and the actual quantity of materials used to produce that quantity of output. Or the planned quantity of production output from given materials less the actual quantity of production output from those materials. Higher Cost Of Goods Sold and Days Inventory Outstanding numbers are indicative of materials variances. Materials variances are associated with supply issues and so necessitate an increase in safety stock to combat stockouts. If the additional materials required to complete the production run are unavailable an additional production run will be required when the materials come in which will incur machine set-up cost. That would mean an increase in quantity of inputs without a corresponding increase in quantity of output. To manage materials variances it is necessary to link process control and Quality Assurance data to your production scheduling software. E
