If the actual quantity of direct materials used equals the budgeted quantity of direct materials that should have been used, any difference between the budgeted total cost and the actual total cost of direct materials used must be due to a:
A) overhead variance.
B) materials price variance.
C) materials quantity variance.
D) materials efficiency variance.

Question

Quizplus · Accepted Answer

If the actual quantity of direct materials used equals the budgeted quantity of direct materials that should have been used, it means there is no materials quantity variance (quantity used was as predicted). However, if there is a difference in the budgeted total cost and the actual total cost of direct materials used, it must be due to a difference in price (i.e. the actual cost per unit of direct material was different from the budgeted cost per unit). This is known as the materials price variance.

If the Actual Quantity of Direct Materials Used Equals the Budgeted