Material quantity Variance is the variance due to a difference in the standard quantity and actual quantity of materials used inproduction. Material price Variance is the difference between the standard cost and the actual cost for the actual quantity of material purchased. To discuss: The indication when the material price variance is favorable but the material quantity variance is unfavorable Solution: If the material price variance is favorable then it means that the price at which the materials are purchased is lower than the standard price. However, if the material quantity variance is unfavorable then it means that the actual quantity of materials used in production is higher than the standard quantity of materials to that should be usedin production. Both these variances might occur simultaneously due to the purchase of low quality materials. Conclusion: Thus, this situation occurs mostly due to the purchase of low quality materials.

Question

Want to see the full answer?

Answer 1

Expert Solution & Answer

Students have asked these similar questions

Can you help me solve this general accounting problem with the correct methodology?

Please provide the solution to this general accounting question using proper accounting principles.

Please provide the correct answer to this general accounting problem using accurate calculations.

Answer 2

Expert Solution & Answer

Answer 3

Expert Solution & Answer

Answer 4

Expert Solution & Answer

Answer 5

Expert Solution & Answer

Answer 6

Expert Solution & Answer

Answer 7

Answer 8

Chapter 10 Solutions