Asked by Tommy Clobes on May 19, 2024
Verified
If the price paid per unit differs from the standard price per unit for direct materials, the variance is a
A) variable variance
B) controllable variance
C) price variance
D) volume variance
Price Variance
The difference between the expected cost of an item and its actual cost, often analyzed in budgeting and cost management.
Standard Price
A predetermined cost that serves as a benchmark for evaluating actual cost performance in purchasing or production.
Direct Materials
Raw materials that can be directly traced to the production of specific goods or services.
- Work out and expound on the price and quantity disparities of direct materials.
Verified Answer
HG
Harman GahouriaMay 21, 2024
Final Answer :
C
Explanation :
When the price paid per unit differs from the standard price per unit for direct materials, it is known as a price variance. This variance indicates the difference between the actual cost incurred on materials and the standard cost that was expected to be incurred. Therefore, choice C is the correct answer.
Learning Objectives
- Work out and expound on the price and quantity disparities of direct materials.
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