Which of the following equations measures the total budget variance?
A) AQ × (AP - SP)
B) SP × (AQ - SQ)
C) SQ × (AP - SP)
D) (AQ × AP) - (SQ × SP)

Question

Quizplus · Accepted Answer

The formula for total budget variance is the difference between the actual cost of the inputs (AQ x AP) and the budgeted cost of the inputs (SQ x SP). This is represented in option D. The other options measure other variances, such as price variance (option A) or quantity variance (option C). Option B measures the profit variance, not the total budget variance.

Which of the Following Equations Measures the Total Budget Variance