Question

which of the following is the correct formula for the materials price variance?question 5 options:a) (actual price of input - budgeted price of input) x actual quantity of inputb) (actual quantity of input used - budgeted quantity of input allowed for actual output) x actual price of inputc) (actual price of input - budgeted price of input) x budgeted quantity of inputd) (actual quantity of input used - budgeted quantity of input allowed for actual output) x budgeted price of input

Answer 1

The materials price variance is calculated by taking the difference between the actual price and budgeted price of inputs and multiplying it by the actual quantity of input.

Step-by-step explanation:

The correct formula for calculating the materials price variance is (actual price of input - budgeted price of input) x actual quantity of input. This measures the difference between what the materials actually cost and what they should have cost, multiplied by the actual quantity of materials used. It's important in cost accounting to analyze this variance to help understand cost behaviors and manage resources efficiently.