A raw materials budget variance is further analyzed into a raw materials (price/rate/spending) variance and a raw materials (usage/efficiency) variance.

A raw materials budget variance is further broken down into two main components for a more detailed analysis. These are:

1. Raw Materials Price Variance: This variance is calculated to determine the difference between the actual cost of raw materials and the standard cost. It helps in understanding whether the company is paying more or less for its raw materials compared to what was initially budgeted.

2. Raw Materials Usage Variance: This variance is calculated to determine the difference between the actual quantity of raw materials used and the standard quantity that should have been used. It helps in understanding whether the company is using its raw materials efficiently or not.

By analyzing these two variances, a company can gain insights into its purchasing and production efficiency, and take corrective actions if necessary.