The direct materials price variance is calculated asA) the difference in Actual Quantities (AQ) multiplied by the Actual Price (AP) of the input.B) the Actual Quantity (AQP) of direct materials divided by the Actual Quantity (AQ).C) the difference in prices of the Actual Quantity Purchased (AQP) and the Actual Price (AP) multiplied by the Actual Quantity Purchased (AQP) and the Standard Price (SP) of the input purchased.D) the direct materials Actual Quantity Purchased (AQ) divided by the per unit price.

Question

13-08-2019
Business

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The direct materials price variance is calculated asA) the difference in Actual Quantities (AQ) multiplied by the Actual Price (AP) of the input.B) the Actual Quantity (AQP) of direct materials divided by the Actual Quantity (AQ).C) the difference in prices of the Actual Quantity Purchased (AQP) and the Actual Price (AP) multiplied by the Actual Quantity Purchased (AQP) and the Standard Price (SP) of the input purchased.D) the direct materials Actual Quantity Purchased (AQ) divided by the per unit price.

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Answer:

C) the difference in prices of the Actual Quantity Purchased (AQP) and the Actual Price (AP) multiplied by the Actual Quantity Purchased (AQP) and the Standard Price (SP) of the input purchased.

Explanation:

Direct Material Price Variance = (Actual Price - Standard Price) [tex]\times[/tex] Actual Quantity

Opening the brackets we have

Actual Price [tex]\times[/tex] Actual Quantity - Standard Price [tex]\times[/tex] Actual Quantity

therefore, from the options provided option C) is correct as Direct Material Price Variance is difference in Actual Cost and Standard Cost of Actual Units

Final Answer

C) the difference in prices of the Actual Quantity Purchased (AQP) and the Actual Price (AP) multiplied by the Actual Quantity Purchased (AQP) and the Standard Price (SP) of the input purchased.