Which one of the following statements is true?
A) If the materials price variance is unfavorable then the materials quantity variance must also be unfavorable.
B) If the materials price variance is unfavorable then the materials quantity variance must be favorable.
C) Price and quantity variances move in the same direction. If one is favorable the others will be as well.
D) There is no correlation of favorable or unfavorable for price and quantity variances.

Question

Quizplus · Accepted Answer

Price and quantity variances are independent of each other. An unfavorable price variance does not dictate the direction of the quantity variance, and vice versa. They are calculated separately and can each be favorable, unfavorable, or neutral regardless of the other's outcome.

Which One of the Following Statements Is True