Question

After taking BUS 202, Homer realized that there will be a favorable materials price variance if:

A. The standard price per unit is less than the actual price per unit.
B. The standard price per unit is greater than the actual price per unit.
C. The actual quantity purchased is greater than expected.
D. The actual quantity purchased is less than expected.

Answer 1

A favorable materials price variance occurs when the standard price per unit exceeds the actual price per unit, indicating cost savings for the company. So, the correct answer is option b.

Step-by-step explanation:

After taking BUS 202, Homer realized that there will be a favorable materials price variance if the standard price per unit is greater than the actual price per unit. This is because a favorable variance indicates that the actual cost is less than what was originally expected or budgeted. If the actual price paid per unit of material is lower than the standard (or budgeted) price, the variance is favorable as it results in a cost saving for the company.

So, the correct answer is option b.