Using the figures above, the material price variance is:
A₹4,800 adverse
B₹9,840 adverse
C₹5,040 adverse
D₹5,040 favourable
Answer & Solution
Correct answer: C. ₹5,040 adverse
1. Material price variance = (SP − AP) × AQ.
2. Substitute: (4 − 4.20) × 25,200 = −0.20 × 25,200.
3. = −5,040, which is an adverse variance.
4. Hence the material price variance is ₹5,040 adverse.
_Source: ICAI BoS Inter Paper 3, Ch 13 "Standard Costing", §13.5.1 Illus 5b_
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