Standard Costs and Balanced Scorecard Chapter 24

What is the materials quantity variance?

a. (AQ) ×(AP) and (AQ)×(SP)
b. (AQ) ×(AP) and (SQ)×(SP)
c. (AQ)×(SP) and (SQ)×(SP)
d. (AQ)×(SP) and (SQ)×(AP)

Answer:

The correct option for the materials quantity variance is option B: (AQ) × (AP) and (SQ) × (SP).

The materials quantity variance measures the difference between the actual quantity (AQ) of materials used at the actual price (AP) and the standard quantity (SQ) of materials allowed at the standard price (SP) per unit of output. It helps to identify the efficiency in using materials during the production process. The formula for the materials quantity variance is:

Materials Quantity Variance = (Actual Quantity × Actual Price) - (Standard Quantity × Standard Price)

Option B, (AQ) × (AP) and (SQ) × (SP), represents the correct formula for the materials quantity variance as it considers both the difference in quantity used (AQ - SQ) and the difference in price (AP - SP) to calculate the variance.

← Building a reservation system for a new fancy hotel Business management and administration careers →

More Posts: