More insight into the flexible-budget variance for direct materials can be gained by subdividing it into the direct materials:
A)mix and volume variances
B)market-share and market-size variances
C)mix and yield variances
D)price and efficiency variances

Question

Quizplus · Accepted Answer

The flexible-budget variance for direct materials can be subdivided into price and efficiency variances. The price variance reflects the difference between the actual price paid for the direct materials and the expected price based on the flexible budget. The efficiency variance reflects the difference between the actual quantity of direct materials used and the expected quantity based on the flexible budget. Subdividing the flexible-budget variance into these two variances provides more specific information about the factors driving the variance and helps managers identify areas for improvement in cost control and materials usage.

More Insight into the Flexible-Budget Variance for Direct Materials Can