What does a favorable direct materials cost variance indicate?
A)The actual quantity of materials used was less than the standard quantity.
B)The actual cost of materials purchased was less than the standard cost of materials purchased.
C)The actual cost of materials purchased was greater than the standard cost of materials purchased.
D)The actual quantity of materials used was greater than the standard quantity.

Question

Quizplus · Accepted Answer

A favorable direct materials cost variance indicates that the actual cost of materials purchased was less than the standard cost of materials purchased. This could be because the business was able to negotiate better prices with suppliers or because they were able to find cheaper raw materials of similar quality.

What Does a Favorable Direct Materials Cost Variance Indicate