Required information

LO $10-1$: Compute the direct materials price and quantity variances and explain their significance.

We learn how to compute direct materials price and quantity variances. When standards are compared to actual performance, the difference is referred to as a variance. Price variances are computed by taking the difference between actual and standard prices and multiplying the result by the quantity of input purchased. Quantity variances are computed by taking the difference between the actual quantity of the input used and the quantity of input that is allowed for the actual output, and then multiplying the result by the standard price of the input.

Using Standard Costs$--$Direct Materials Variances

Knowledge Check $01$

The standard quantity allowed is$\_\_\_\_\_\_\_\_\_$blank$.$

multiple choice

the amount of an input that should have been used to complete the planned output for the period.

the actual amount of input that was used to complete the planned output for the period.

the amount of an input that should have been used to complete the actual output for the period.

the actual amount of input that was used to complete the actual output for the period.