A company uses milk in producing its product. If the price of milk doubles, which variance is directly impacted?

Question

Quizplus · Accepted Answer

If the price of milk doubles, it directly impacts the cost of materials used in production. This change in cost would be reflected in the materials price variance, which measures the difference between the actual cost of materials purchased and the expected cost based on budgeted or standard costs.

A Company Uses Milk in Producing Its Product