Asked by Dekia Mitchell on Jun 05, 2024
Verified
A total materials variance is analyzed in terms of
A) price and quantity variances.
B) buy and sell variances.
C) quantity and quality variances.
D) tight and loose variances.
Materials Variance
The difference between the actual cost of materials used in production and the expected (standard) cost of those materials.
Price Variances
The difference between the actual cost of a good or service and its standard or expected cost, which can be favorable or unfavorable.
Quantity Variances
Differences between the actual quantity of materials or inputs used in a production process and the standard quantity expected to be used, often leading to cost variances.
- Understand the principle of total materials variance and its connection to price and quantity discrepancies.
Verified Answer
ZK
Zybrea KnightJun 05, 2024
Final Answer :
A
Explanation :
A total materials variance is typically analyzed in terms of price and quantity variances. The price variance relates to the difference between the actual cost of materials purchased and the standard cost of materials, while the quantity variance relates to the difference between the actual quantity of materials used and the standard quantity of materials. Together, these variances can give insight into the efficiency and effectiveness of a company's materials management.
Learning Objectives
- Understand the principle of total materials variance and its connection to price and quantity discrepancies.