Asked by Denise Rodriguez on Jul 18, 2024
Verified
The formula for the materials price variance is
A) (AQ × SP) - (SQ × SP) .
B) (AQ × AP) - (AQ × SP) .
C) (AQ × AP) - (SQ × SP) .
D) (AQ × SP) - (SQ × AP) .
Materials Price Variance
Materials price variance is the difference between the actual cost of materials used in production and the expected (or standard) cost, indicating efficient materials purchasing.
AQ × AP
Represents the multiplication of the Actual Quantity (AQ) by the Actual Price (AP), often used in financial and operational analyses.
- Pinpoint and evaluate deviations in direct materials (quantity and pricing) and direct labor (regarding efficiency and payment rate).
Verified Answer
MS
Mohamed SalehJul 21, 2024
Final Answer :
B
Explanation :
The materials price variance formula is (Actual Quantity (AQ) × Actual Price (AP)) - (Actual Quantity (AQ) × Standard Price (SP)), which identifies the difference between what the materials actually cost and what they should have cost at the standard price.
Learning Objectives
- Pinpoint and evaluate deviations in direct materials (quantity and pricing) and direct labor (regarding efficiency and payment rate).
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