A direct materials flexible budget variance can be broken down into a price variance and an efficiency variance.

Question

Quizplus · Accepted Answer

This statement is correct. The direct materials flexible budget variance is the difference between the actual cost of direct materials used and the cost that was budgeted for that level of production. This variance can be further analyzed into a price variance and an efficiency variance, which help to identify whether the variance is due to paying more or less for materials or using more or less materials than anticipated.

A Direct Materials Flexible Budget Variance Can Be Broken Down