The materials usage variance is calculated by the equation
A)(Standard Price ´ Actual Quantity)- (Standard Price ´ Standard Quantity).
B)(Standard Price ´ Standard Quantity)+ (Standard Price ´ Actual Quantity).
C)(Actual Price ´ Actual Quantity)- (Standard Price ´ Actual Quantity).
D)(Actual Price ´ Standard Quantity)+ (Actual Quantity ´ Standard Price).
E)None of these.

Question

Quizplus · Accepted Answer

The materials usage variance measures the difference between the standard quantity of materials that should have been used for a given level of output and the actual quantity of materials used. The equation takes into account the standard price (the cost of materials per unit as set by the company's management) and the actual quantity of materials used in production. By subtracting the cost of the actual materials used from the cost of the standard materials that should have been used, we can determine whether there was a favorable or unfavorable variance. Choice A accurately represents this calculation.

The Materials Usage Variance Is Calculated by the Equation