Given that the actual cost of a material is $700 while the planned cost was $900, what type of variance is observed?

Multiple choice question for Direct Cost Variances and Management Control. Select an option, then review the explanation below.

Explanation

Since the actual price ($700) is less than the budgeted price ($900), the price variance is considered favorable, indicating cost savings on the material price.

Practice related questions from the same subject.

1.Within the hierarchy of costing and budgeting, which of the following represents a product sustaining cost?
2.Given that the actual outcome is $65,000 and the static budget variance amounts to $35,000, what is the value of the static budget?
3.What term is used to describe the anticipated performance of a company?
4.Given that the actual labor cost is $1200 while the planned labor cost is $1000, what is the nature of the labor price variance?
5.In management control, what serves as the benchmark for evaluating actual performance?

Given that the actual cost of a material is $700 while the planned cost was $900, what type of variance is observed?

Explanation

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