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Direct Materials Price

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The quantity purchased is used in computing the direct materials price variance because you are looking for the difference in the price of materials for the job, whereas, when computing the materials quantity variance you are comparing the standard material quantity against what i actually took to do the job. Material price is based on how much the materials were for the job compared to the standard price.

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The solution determines the materials price.

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Direct materials price variance is the difference between the actual costs of materials for a given quantity minus the standard price of ...

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Robert Reinhart, MBA
Education
  • MBA, Merage School of Business, Univ of Cal, Irvine
  • BA, Univ of Cal, Irvine
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