Question

If the calculated direct material price variance is favorable, which of the following statements would always be true? question 4 options:

O the actual direct material input ratio was lower than the standard direct material input ratio.
O the standard labor rate was more than the actual labor rate paid to employees.
O the standard price was higher than the actual price paid to purchase direct materials.
O the quantity of direct material used in production was less than the quantity of direct materials purchased during the period.
O the standard unit direct labor cost was higher than the actual unit direct labor cost.

Answer 1

The statement that is always true when there is a favorable direct material price variance is that the actual price for materials was lower than the budgeted standard price, leading to cost savings. Therefore correct option is C

Step-by-step explanation:

If the calculated direct material price variance is favorable, then the statement that will always be true is: the standard price was higher than the actual price paid to purchase direct materials. When the actual price for materials is lower than the standard price, the cost saving leads to a favorable price variance. This specifically relates to the cost of purchasing the materials, not the ratio of input, labor rates, or quantities of material used in production versus purchased.