Although computed separately,price variances and efficiency variances should not be analysed separately from each other.

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Price variances and efficiency variances are interrelated and dependent on each other. For example, a decrease in material efficiency may result in an adverse price variance due to an increase in material usage. Therefore, it is important to analyze both variances together to identify the root cause and take corrective actions.

Although Computed Separately,price Variances and Efficiency Variances Should Not Be