The actual price of material is less than budgeted price, this means that _________?
Correct answer: A. price variance is favorable
- A. price variance is favorable
- B. price variance is unfavorable
- C. cost variance is favorable
- D. cost variance is unfavorable
Explanation
Paying less than the standard or budgeted material price creates a favorable price variance. Total cost variance cannot be determined from price information alone because quantity used also affects it.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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More Cost Accounting questions
In cost accounting, the goal of variance analysis is to ___________?
In management control, an efficiency variance is also referred as __________?
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The budget which is planned around a single output level is called _________?
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The difference between actual input variance and the budgeted input variance is called __________?