Consider the following statements:
I. The standard cost per unit of materials is used to calculate a materials price variance.
II. The standard cost per unit of materials is used to calculate a materials quantity variance.
III. The standard cost per unit of materials cannot be determined until the end of the period.
Which of the above statements is (are) true?
A) I only.
B) II only.
C) III only.
D) I and II.
E) I, II, and III.

Question

Quizplus · Accepted Answer

The standard cost per unit of materials is indeed used to calculate both a materials price variance (comparing actual price to standard price) and a materials quantity variance (comparing actual quantity used to standard quantity allowed). Statement III is incorrect because the standard cost per unit of materials is typically determined before the period begins, not at the end.

Consider the Following Statements