The price variance is the difference between the actual price and the budgeted price of the input, multiplied by the actual quantity of input.

Question

Quizplus · Accepted Answer

This is the correct definition of price variance, as it measures the difference between the actual cost of an input and what was budgeted for that input. It takes into account both the price paid and the quantity used, providing a measure of how well the company is controlling costs.

The Price Variance Is the Difference Between the Actual Price