A cost variance equals the sum of the quantity variance and the price variance.

Question

Quizplus · Accepted Answer

This statement is true. The cost variance is the difference between the actual cost and expected cost, while the quantity variance is the difference between the actual quantity of inputs used and the expected quantity of inputs, and the price variance is the difference between the actual price paid for inputs and the expected price. Therefore, cost variance = quantity variance + price variance.

A Cost Variance Equals the Sum of the Quantity Variance