Staples - Johnstown 590 Galleria Dr, Johnstown PA 15904 Phone Number: (814) 262-9096
The distribution of manufacturing overhead costs to individual product unit, or production batches generally, requires a base or a cost driver, to which reference a rate, known as material burden rate applies. Material burden is the amount of manufacturing overhead costs that a unit of the base carries.
The total of both variances equals the total direct materials variance. To apply this method to the Band Book example, take a look at the next diagram. Start at the bottom. Direct materials actually cost $297,000, even though the standard cost of the direct materials is only $289,800.