The difference between actual and standard cost caused by the difference between the actual number of resource-units used and the standard number of resource-units that should have been used for the output of the period is called the:
A) Controllable variance.
B) Master budget variance.
C) Flexible-budget variance.
D) Quantity (or efficiency or usage) variance.
E) Price variance.

Question

Quizplus · Accepted Answer

The difference between actual and standard cost caused by the difference between the actual number of resource-units used and the standard number of resource-units that should have been used for the output of the period is called the quantity (or efficiency or usage) variance. Therefore, option D is the correct choice. The controllable variance is related to the difference between the actual costs and flexible budget costs and is controllable by the management. Master budget variance is caused by the difference between the actual and budgeted results, and the flexible budget variance is the difference between the actual costs and flexible budget costs. The price variance is caused by the difference between the actual and standard price of inputs used in production.

The Difference Between Actual and Standard Cost Caused by the Difference