Which of the following is true concerning the materials price variance?
A) It is the difference between the actual and standard unit price of an input multiplied by the number of inputs used.
B) It is the difference between the actual and standard unit price of an output multiplied by the number of inputs used.
C) It is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased.
D) It is the difference between the actual and standard unit price of an output multiplied by the number of inputs purchased.
E) None of these.

Question

Quizplus · Accepted Answer

The materials price variance is calculated as the difference between the actual price paid for a material and the standard price for that material, multiplied by the quantity of the material purchased. Therefore, the correct choice is C - it is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased. A is incorrect because it uses the number of inputs used, rather than purchased. B and D are incorrect because they involve the unit price of an output, rather than an input.

Which of the Following Is True Concerning the Materials Price