The best label for the formula (AQ - SQ)× SP is the:
A)materials quantity variance.
B)materials price variance.
C)total cost variance for materials.
D)labor wage rate variance.

Question

Quizplus · Accepted Answer

The formula (AQ - SQ) × SP represents the materials quantity variance. It calculates the difference between the actual quantity (AQ) of materials used and the standard quantity (SQ) that should have been used, multiplied by the standard price (SP) per unit of material. This variance helps in analyzing the efficiency in using materials.

The Best Label for the Formula (AQ - SQ)× SP