Question

Which one of the following is the difference in direct material costs between the actual cost...

Which one of the following is the difference in direct material costs between the actual cost incurred during the period and the total standard cost in the flexible budget for the units manufactured during the period?

a) direct materials price variance

b) direct materials mix variance

c) direct materials usage variance

d) direct materials flexible-budget variance

e) direct materials efficency variance

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Answer #1

Solution :

The Answer is (d) Direct Material Flexible Budget Variance.

Flexible Budget is the budget which is adjusted as per the activity level or production level and cost are adjusted accordingly. The difference between Standard Material Cost generated by flexible budget and Actual Cost Incurred is called the Direct Material Flexible Budget Variance. All other options given in the question are incorrect since the difference is the between standard costs and actual costs not of quantity, rate, material mix.

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