Price/rate variances focus on the differences between
A)actual and standard inputs multiplied by actual prices.
B)actual and standard unit prices of an input multiplied by the actual quantity of inputs.
C)actual and standard inputs multiplied by standard prices.
D)actual and standard unit prices of an input multiplied by the budgeted quantity of inputs.

Question

Quizplus · Accepted Answer

Price/rate variances focus on the differences between the actual and standard unit prices of an input multiplied by the actual quantity of inputs. This calculation helps to determine if the actual prices paid were higher or lower than the budgeted/standard prices for the same inputs, and if the company is spending more or less than expected on these inputs. Option A is incorrect because it adds the additional factor of actual prices, which is not relevant to price/rate variances. Option C is incorrect because it uses the standard prices instead of the actual prices paid, which is not useful for evaluating variances. Option D is incorrect because it uses the budgeted quantity of inputs instead of the actual quantity, which does not reflect the actual usage of inputs and can lead to inaccurate variance calculations.

Price/rate Variances Focus on the Differences Between