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Material price variance is measured as
Astandard quantity times the difference in price
Bactual quantity times the difference in price
Cactual price times the difference in quantity
Dstandard cost less standard quantity
Answer & Solution
Correct answer: B. actual quantity times the difference in price
1. Price variance isolates the effect of paying a different price, so quantity must be held constant.
2. It is computed on the actual quantity, written as actual quantity x (standard price less actual price).
3. Equivalently, standard cost of actual quantity less actual cost.
4. Using standard quantity instead would mix a usage effect into a price figure.
_Source: ICAI Cost and Management Accounting Ch13 'Standard Costing', section 13.7.1(A)_
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