A favorable price variance for direct materials indicates that:
A)a lower price than planned was paid for materials
B)a higher price than planned was paid for materials
C)less material was used during production than planned for actual output
D)more material was used during production than planned for actual output

Question

Quizplus · Accepted Answer

A favorable price variance for direct materials means that the actual cost of materials was lower than the budgeted cost. This could be due to getting a better deal on materials from the supplier, negotiating a lower price or using an alternative material that is cheaper than the originally planned material.

A Favorable Price Variance for Direct Materials Indicates That