Let AP = actual price of raw materials, SP = the standard price, AQ = the actual quantity of materials used, and SQ = the standard quantity of materials for a given level of production. The raw materials price variance equals

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Quizplus · Accepted Answer

The raw materials price variance is the difference between the actual cost of the materials used and the expected cost. This can be calculated as AQ × (AP - SP), where AQ is the actual quantity of materials used, AP is the actual price paid for those materials, and SP is the standard price for those materials. This formula measures the impact of changes in the price of raw materials on the cost of production.

Let AP = Actual Price of Raw Materials, SP =