Which statement best describes the material price variance?
A) It is the difference between the actual and standard unit price of an input multiplied by the number of inputs used.
B) It is the difference between the actual and standard unit price of an output multiplied by the number of inputs used.
C) It is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased.
D) It is the difference between the actual and standard unit price of an output multiplied by the number of inputs purchased.

Question

Quizplus · Accepted Answer

The material price variance is the difference between the actual cost of a quantity of material and its expected or standard cost, taking into account any difference in the actual unit price and the standard unit price. This variance is calculated by multiplying the actual quantity purchased by the difference between the actual unit price and the standard unit price. Therefore, option C is the correct choice as it states that the material price variance is the difference between the actual and standard unit price of an input multiplied by the number of inputs purchased.

Which Statement Best Describes the Material Price Variance