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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 direct materials variance equals the difference between total actual cost of materials (AP x AQ) and the budgeted cost of materials, based on standard costs (SP x SQ): For example, Band Bookâs standard price is $10.35 per pound. The standard quantity per unit is 28 pounds of paper per case.