Which variance measures the difference between actual direct material price paid and standard expected price, multiplied by actual quantity purchased?
ALabor Rate Variance
BMaterial Price Variance
COverhead Spending Variance
DMaterial Quantity Variance
Explanation
* Material Price Variance = (Actual Price – Standard Price) * Actual Quantity Purchased.
* Favorable when Actual Price < Standard Price.
* Purchasing managers are typically accountable for material price variances.
Exam Relevance
- Topic: Cost Accounting
- Subtopic: Variance Analysis
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