Material cost variance is
Astandard cost less actual cost
Bactual cost less standard cost
Cstandard price less actual price
Dstandard quantity less actual quantity
Answer & Solution
Correct answer: A. standard cost less actual cost
1. A variance compares what the cost should have been against what it was.
2. Material cost variance = standard cost less actual cost.
3. A positive figure is therefore favourable, since actual cost came in below standard.
4. Reversing the subtraction flips every sign and turns favourable into adverse.
_Source: ICAI Cost and Management Accounting Ch13 'Standard Costing', section 13.7.1_
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