Final answer:
The direct materials variance formula is (SQ - AQ) × SP, where SQ is the standard quantity, AQ is the actual quantity, and SP is the standard price.
Step-by-step explanation:
The formula for the direct materials variance is (SQ - AQ) × SP.
Where:
- SQ represents the standard quantity
- AQ represents the actual quantity
- SP represents the standard price
The direct materials variance measures the difference between the standard quantity of materials that should have been used and the actual quantity of materials used, multiplied by the standard price. It helps a company analyze whether it is using more or less materials than expected and if the materials are being purchased at the expected price.