Asked by Sallye Ferguson on May 15, 2024
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When the actual price per unit of direct materials used exceeds the standard price per unit,the company has an unfavorable direct materials price variance.
Direct Materials Price Variance
The difference between the actual cost and the standard cost of materials used in production, indicating how efficiently materials are being purchased.
Standard Price
Standard price is a predetermined cost assigned to materials and goods, used in budgeting and costing calculations.
Actual Price
The real price at which a transaction takes place, unaffected by any discounts or premiums.
- Understand the calculation methods for price and quantity differences.
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Learning Objectives
- Understand the calculation methods for price and quantity differences.
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