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Homework answers / question archive / What is a price and quantity variance? And why are separate price and quantity variances computed? Discussion Board Instructions Summarized: The initial discussion board post will need to be a minimum of 100 words
What is a price and quantity variance? And why are separate price and quantity variances computed?
The initial discussion board post will need to be a minimum of 100 words. The initial post is worth 12 points.
After you type your initial post, read through the other entries and reply directly to at least two classmates on a different day than your initial post. Each response is worth four points. The response posts need to be at least two-three complete sentences. When you reply, please type the name of the classmate you are responding to, provide a welcome message to that person, and type your name at the bottom of the message.
For all posts make sure to use proper grammar, capitalization, (I instead of i) and punctuation in this college level course in all correspondence. Please avoid “text” or “twitter speak” when corresponding.
Complete the initial post on or before 11:59 p.m. on Thursday, October 29th. On a different day respond to two other students on or before 11:59 p.m. on Sunday, November 1st.
To see the grading rubric for the discussions please click on the ellipses (the three dots in a column) in the upper right hand corner of this page.
A price and quantity variance is simply the difference between what was planned for the production or service period and what was actually done during the period. It is the difference between planned prices (standard) or planned hours of labor and actual prices incurred or expended, or actual labor hours as an example. There may be many factors that change pricing, labor hours, and variable overhead and determining where these variances are occurring gives management more information on how to better adjust the next period to minimize expense and maximize profit. We use separate price and quantity variances because these two items are managed separately by different managers in different departments. We also use price and quantity separately due to the lag time between when materials are purchased for production to when they are actually being used as an input in the production as an example. It is also useful to keep them separate because it allows us to more easily identify that an increase in production expenses because of labor could have actually been caused by inferior materials being ordered which initially looked good on paper because the materials were cheaper than what was budgeted.
