Material Rate Variance is calculated as the difference between the GL cost of an item at the time it is issued to a work order and the frozen cost of the item in the work order bill. This variance is calculated when material is issued to a work order by Work Order Component Issue (16.10), Work Order Receipt Backflush (16.12), or Work Order Operation Backflush (16.19)

This variance is calculated as:

The material usage variance is calculated at work order accounting close and is dealt with later in the course.