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1 In analysis of flexible budget variances, direct materials price variance reflects the effects of Select one: O a
1
In analysis of flexible budget variances, direct materials price variance reflects the effects of Select one: O a. changing input prices, holding the quality of outputs constant Ob.changing input quantities, holding the input price constant oc. changing input prices, holding the quantity of inputs constant O d. changing input quantities, while changing the input price
2
In analysis of flexible budget variances, direct materials price variance reflects the effects of ________. Select one: a. changing input quantities, holding the input price constant b. changing input prices, holding the quantity of inputs constant c. changing input prices, holding the quality of outputs constant d. changing input quantities, while changing the input price
Expert Solution
1
Answer -
Option (C) - Changing input prices, holding the quantity of inputs constant
Explanation -
Direct Materials Price Variance = (Actual Quantity * Actual Price ) - ( Actual Quantity * Standard Price )
In the formula, we can clearly see that actual quantity is a constant whereas the price varies thereby creating the variance either favorable or unfavorable.
2
Answer -
Option (B) - Changing input prices, holding the quantity of inputs constant.
Explanation -
Direct Materials Price Variance = (Actual Quantity x Actual Price) - (Actual Quantity x Standard Price)
Change in price creates the variance either favorable or unfavorable. Quantity remains constant.
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