Asked by Cameron Simmons-Willis on May 18, 2024
Verified
(Actual Price - Standard Price) × Actual Quantity
A) Direct materials price variance
B) Direct labor rate variance
C) Direct labor time variance
D) Direct materials quantity variance
E) Budgeted variable factory overhead
Direct Materials Price Variance
The difference between the actual cost of direct materials and the expected cost at standard prices.
Actual Price
The price at which goods or services are sold, reflecting current market conditions.
Standard Price
A predetermined cost serving as a benchmark for the valuation of goods and services in accounting and budgeting.
- Attain the know-how for computing variances concerning direct materials, direct labor, and production overhead expenses.
Verified Answer
TM
titus morrisMay 22, 2024
Final Answer :
A
Explanation :
The formula (Actual Price - Standard Price) × Actual Quantity is used to calculate the Direct materials price variance, which measures the difference between what was actually paid for the materials versus what should have been paid according to the standard cost.
Learning Objectives
- Attain the know-how for computing variances concerning direct materials, direct labor, and production overhead expenses.