The direct materials flexible budget variance can be divided into which of the following two variances

Question

Quizplus · Accepted Answer

The direct materials flexible budget variance is the difference between the actual cost of direct materials purchased and the flexible budget amount for direct materials. This variance can be divided into two variances: price variance and efficiency variance. Price variance is the difference between the actual price paid for direct materials and the standard price allowed for the actual quantity purchased. Efficiency variance is the difference between the actual quantity of direct materials used and the standard quantity of direct materials that should have been used, multiplied by the standard price per unit. Therefore, option D is the correct answer.

The Direct Materials Flexible Budget Variance Can Be Divided into Which