The materials price variance is the difference between the actual price of materials and which of the following?

• A. The standard price of materials multiplied by the standard quantity used
• B. The standard price of materials multiplied by the actual quantity used
• C. The actual price of materials multiplied by the standard quantity used
• D. The standard price of materials multiplied by the actual quantity purchased

Answer: (D)

Verified step by step guidance

1. Understand the concept of materials price variance: It measures the difference between the actual cost of materials and the expected (standard) cost of materials based on the actual quantity purchased.
2. Identify the formula for materials price variance: Materials Price Variance = (Standard Price - Actual Price) × Actual Quantity Purchased.
3. Clarify the components of the formula: The 'Standard Price' is the predetermined cost per unit of material, and the 'Actual Price' is the cost per unit actually paid. The 'Actual Quantity Purchased' refers to the total quantity of materials bought during the period.
4. Analyze the options provided in the problem: The correct answer is the standard price of materials multiplied by the actual quantity purchased, as this aligns with the formula for calculating materials price variance.
5. Apply the formula conceptually: To calculate the variance, subtract the actual price from the standard price, then multiply the result by the actual quantity purchased to determine the variance amount.