The best label for the formula [(AP)× (AQ)- (SP)× (AQ)] is the:
A)materials quantity variance.
B)materials price variance.
C)total cost variance for materials.
D)labor efficiency variance.

Question

Quizplus · Accepted Answer

The formula [(AP)× (AQ)- (SP)× (AQ)] represents the materials price variance, which measures the difference between the actual price paid for materials and the expected price, multiplied by the actual quantity of materials purchased. This variance helps to assess whether the organization paid more or less for materials than anticipated, and can be useful in identifying areas where material cost savings can be achieved.

The Best Label for the Formula [(AP)× (AQ)- (SP)× (AQ)]