The total variance must always equal the sum of the price, efficiency, and intensity variances.

Question

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The total variance is the sum of the price, efficiency, and intensity variances because these three variances represent the different ways in which the actual cost of a product can differ from the standard cost. The price variance measures the difference between the actual price paid for a product and the standard price, the efficiency variance measures the difference between the actual quantity of inputs used to produce a product and the standard quantity, and the intensity variance measures the difference between the actual cost of inputs used to produce a product and the standard cost of those inputs.

The Total Variance Must Always Equal the Sum of the Price