Price variance: It is the difference between price per unit in standard and actual price of product and multiplying that with quantity purchased in actual. Quantity variance: It is referred to the amount which is computed by multiplying the standard price per unit with the difference between quantity in actual term and standard term of product. Direct material cost variance: This is calculated by combining material price variance and material quantity variance. The conclusion of production manager is correct or not.

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Chapter 9, Problem 6ME

To determine

Concept introduction:

Price variance:

It is the difference between price per unit in standard and actual price of product and multiplying that with quantity purchased in actual.

Quantity variance:

It is referred to the amount which is computed by multiplying the standard price per unit with the difference between quantity in actual term and standard term of product.

Direct material cost variance:

This is calculated by combining material price variance and material quantity variance.

The conclusion of production manager is correct or not.

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