Which variance is described as the difference between actual input price and the standard price per unit, when usage is ignored?

Which variance is described as the difference between actual input price and the standard price per unit, when usage is ignored?

• A. Material usage variance
• B. Volume variance
• C. Price or rate variance
• D. Sales price variance

Answer: (C)

The idea being tested is how material variances are split: price (rate) variance versus usage (quantity) variance. When usage is ignored, you’re looking only at what you actually paid per unit compared with the standard price per unit, for the actual quantity bought. The variance is calculated as (actual price per unit − standard price per unit) × actual quantity purchased. If you paid more than planned, the variance is unfavorable; if you paid less, it’s favorable. The other variances involve differences due to how much material was used or produced, not the price per unit.

The idea being tested is how material variances are split: price (rate) variance versus usage (quantity) variance. When usage is ignored, you’re looking only at what you actually paid per unit compared with the standard price per unit, for the actual quantity bought. The variance is calculated as (actual price per unit − standard price per unit) × actual quantity purchased. If you paid more than planned, the variance is unfavorable; if you paid less, it’s favorable. The other variances involve differences due to how much material was used or produced, not the price per unit.