Question

If variances are recorded in the accounts at the time the manufacturing costs are incurred, what does a debit balance in Direct Materials Price Variance represent?

Answer 1

unfavorable variance

Step-by-step explanation:

In such situation, a debit balance in Direct Materials Price Variance represents

unfavorable variance. This is an accounting term that explains situations when the actual cost of the project is higher than the standard or projected cost.

It means that the actual price at which the materials are bought is higher than the standard price / budgeted price / estimated price and therefore, more amount has to be paid than expected.