This the most detailed methodology for recording the material variances. All the variances are recorded in this method.
Ledger Accounts Used
The ledger accounts used for recording the transactions are
 Material Price Variance (MPV) a/c
 Material Mix Variance (MMV) a/c
 Material Yield Variance (MYV) a/c
 Material Usage/Quantity Variance (MUV/MQV) a/c
 Material Cost Variance (MCV) a/c
Price Variance
Assuming that the standard pricing of stocks is being followed, the price variance is identified and recorded at the point of purchase itself.
The transactions with regard to accounting for material price variance would be.
 Recording Material Price Variance.
 Transferring the Normal part of the variance to the relevant accounts.
 Transferring the abnormal part of the variance to "MCV a/c".
When the Variance is Adverse
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
SLC a/c
MPV a/c
To GLA a/c

Dr Dr 
– – – 
xxx xxx 
xxx 
[For the value of material purchased and the adverse price variance thereon identified and recorded at the time of purchase.]

(or) 
– 
WIP a/c
FOH a/c
MPV a/c
To SLC a/c

Dr Dr Dr 
– – – – 
xxx xxx xxx 
xxx 
[For the value of material issued as direct and indirect materials and the adverse price variance thereon identified and recorded at the time of issue of materials.]

02. 
– 
SLC a/c
WIPC a/c
FGLC a/c
COS a/c
To MPV a/c

Dr Dr Dr Dr 
– – – – – 
xxx xxx xxx xxx 
xxx 
[For the transfer/adjustment of normal part of the adverse price variance to the relevant accounts.]

03. 
– 
MCV a/c
To MPV a/c

Dr 
– – 
xxx 
xxx 
[For the transfer of abnormal part of the unfavorable price variance to the Material Cost Variance account.]

When the Variance is Favourable/Favorable
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
SLC a/c
To GLA a/c To MPV a/c

Dr 
– – – 
xxx 
xxx xxx 
[For the value of material purchased and the favourable price variance thereon identified and recorded at the time of purchase.]

(or) 
– 
WIP a/c
To SLC a/c To MPV a/c

Dr 
– – – 
xxx 
xxx xxx 
[For the value of material issued as direct and indirect materials and the favorable price variance thereon identified and recorded at the time of issue of materials.]

02. 
– 
MPV a/c
To SLC a/c To WIP a/c To FGLC a/c To COS a/c

Dr 
– – – – – 
xxx 
xxx xxx xxx xxx 
[For the transfer/adjustment of normal part of the favorable price variance to the relevant accounts.]

03. 
– 
MPV a/c
To MCV a/c

Dr 
– – 
xxx 
xxx 
[For the transfer of abnormal part of the favourable price variance to the "MCV a/c".]

Mix Variance
This may be identified and recorded at the time of issue of materials or along with the yield variance on completion of production.
When the Variance is Adverse
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
WIP a/c
MMV a/c
To SLC a/c

Dr Dr 
– – – 
xxx xxx 
xxx 
[For the value of direct materials used and the adverse mix variance thereon identified and recorded at the time of issue of materials.]

(or) 
– 
FGLC a/c
MMV a/c
To WIP a/c

Dr Dr 
– – – 
xxx xxx 
xxx 
[For the value of goods produced and the adverse mix variance thereon identified and recorded at the time of completion of production.]

02. 
– 
WIPC a/c
FGLC a/c
COS a/c
To MMV a/c

Dr Dr Dr 
– – – – 
xxx xxx xxx 
xxx 
[For the transfer/adjustment of normal part of the adverse mix variance to the relevant accounts.]

03. 
– 
MUV a/c
To MMV a/c

Dr 
– – 
xxx 
xxx 
[For the transfer of abnormal part of the unfavorable mix variance to the Material Usage Variance account.]

When the Variance is Favourable/Favorable
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
WIP a/c
To SLC a/c To MMV a/c

Dr 
– – – 
xxx 
xxx xxx 
[For the value of direct material used and the favourable mix variance thereon identified and recorded at the time of issue of materials.]

(or) 
– 
FGLC a/c
To WIP a/c To MMV a/c

Dr 
– – – 
xxx 
xxx xxx 
[For the value of goods produced and the favorable mix variance thereon identified and recorded at the time of completion of production.]

02. 
– 
MMV a/c
To WIP a/c To FGLC a/c To COS a/c

Dr 
– – – – 
xxx 
xxx xxx xxx 
[For the transfer/adjustment of normal part of the favorable mix/yield variance to the relevant accounts.]

03. 
– 
MMV a/c
To MUV a/c

Dr 
– – 
xxx 
xxx 
[For the transfer of abnormal part of the favourable mix/yield variance to the Material Usage Variance account.]

Yield Variance
This is identified and recorded after the production is completed i.e. at the time of transfer of completed production to finished goods stock.
Except for the point at which the variance is recorded, the transactions relating to these two variances need similar entries for recording.
 Recording Mix Variance.
 Recording Yield Variance.
 Transferring the normal part of the variances to the relevant accounts.
 Transferring the abnormal part of the variances to "MUV/MQV a/c".
When the Variance is Adverse
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
FGLC a/c
MYV a/c
To WIP a/c

Dr Dr 
– – – 
xxx xxx 
xxx 
[For the value of goods produced and the adverse yield variance thereon identified and recorded at the time of completion of production.]

02. 
– 
WIPC a/c
FGLC a/c
COS a/c
To MYV a/c

Dr Dr Dr 
– – – – 
xxx xxx xxx 
xxx 
[For the transfer/adjustment of normal part of the adverse yield variance to the relevant accounts.]

03. 
– 
MUV a/c
To MYV a/c

Dr 
– – 
xxx 
xxx 
[For the transfer of abnormal part of the unfavorable yield variance to the Material Usage Variance account.] 
When the Variance is Favourable/Favorable
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
FGLC a/c
To WIP a/c To MYV a/c

Dr 
– – – 
xxx 
xxx xxx 
[For the value of goods produced and the favourable/favorable yield variance thereon identified and recorded at the time of completion of production.]

02. 
– 
MYV a/c
To WIP a/c To FGLC a/c To COS a/c

Dr 
– – – – 
xxx 
xxx xxx xxx 
[For the transfer/adjustment of normal part of the favorable mix/yield variance to the relevant accounts.]

03. 
– 
MYV a/c
To MUV a/c

Dr 
– – 
xxx 
xxx 
[For the transfer of abnormal part of the favourable mix/yield variance to the Material Usage Variance account.] 
Usage/Quantity Variance [Where it is a Consolidation Account]
The total variance in the Usage Variance account represents abnormal variance. This is to be transferred to the Cost Variance account.
There is only one transaction in such a case.
 Transferring Abnormal Variance to Cost Variance Account.
When the Variance is Adverse
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
MCV a/c
To MUV a/c

Dr 
– – 
xxx 
xxx 
[For the total adverse usage variance transferred to cost variance account.] 
When the Variance is favourable/favorable
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
MUV a/c
To MCV a/c

Dr 
– – 
xxx 
xxx 
[For the total favourable/favorable usage variance transferred to cost variance account.] 
Cost Variance [Where it is a Consolidation Account]
The total variance in the Cost Variance account represents abnormal variance. This is to be transferred to the Costing Profit and Loss account.
There is only one transaction in such a case.
 Transferring Abnormal Variance to Costing Profit and Loss Account.
When the Variance is Adverse
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
CP&L a/c
To MCV a/c

Dr 
– – 
xxx 
xxx 
[For the total adverse cost variance transferred to costing profit and loss account.] 
When the Variance is Favourable/Favorable
Journal in the books of M/s __ for the period from ____ to _____

Date 
V/R No. 
Particulars 
L/F 
Debit Amount (in Rs) 
Credit Amount (in Rs) 
01. 
– 
MCV a/c
To CP&L a/c

Dr 
– – 
xxx 
xxx 
[For the total favourable/favorable cost variance transferred to costing profit and loss account.] 