Question

Material Price Variance $=$ ___________.

• A. Standard Price
• B. (Standard Unit Price $-$ Actual Unit Price $)\times$Actual Quantity
• C. Actual Price
• D. Standard Usage

Answer 1

The correct option is B (Standard Unit Price $-$ Actual Unit Price $)\times$Actual Quantity

In case of the variance between the standard cost of material and actual cost of material , there will be a variance between standard cost of material and actual cost of material. Material cost variance arises due to price variation or usage variation.

Material price variance is the difference between the standard price and actual price multiply by actual usage.

Material Price Variance= (Standard Price- Actual Price) $\times$ Actual Quantity.