Home › CA Inter › Cost and Management Accounting › Standard Costing › When material purchased is not stated in a quest…
When material purchased is not stated in a question, actual quantity for the price variance is taken as
Athe standard quantity
Bthe quantity consumed
Cthe closing stock
Dthe budgeted quantity
Answer & Solution
Correct answer: B. the quantity consumed
1. Price variance is normally computed on the quantity purchased, since that is when the price is committed.
2. Many questions give only the quantity consumed.
3. In that case the rule is that actual quantity is taken as equal to material consumed.
4. Substituting standard quantity instead would silently convert the price variance into a mixed figure.
_Source: ICAI Cost and Management Accounting Ch13 'Standard Costing', section 13.7.1(A) note_
Related questions
Standard costing is most useful for control because standards are setLabour efficiency variance measures the effect of a difference inStandard quantity 500 kg at 20 per kg, actual 520 kg at 20 per kg. The material usage variAn adverse material price variance is generally the responsibility of theMaterial cost variance can be split intoMaterial price variance is measured asMaterial cost variance isStandard costing aids in inventory valuation because: