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Material usage variance
Difference among standard quantity of material and actual quantity used is the material usage variance. This variance arises due to:
Economic use of materials
Use of substitutes
Higher/less wastage of materials
Changes in designs or specification of product
EOQ mathematical model As costs of ordering and holding stock are equal at the EOQ point, we can build a simple mathematical model to solve the problem, as follows: (Q/ 2) X
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