The Flexible Budget Breaks Down into the Price and Quantity

question 34

Essay

The flexible budget breaks down into the price and quantity variances for direct materials.
Required:
a.List two reasons why actual prices might differ from standard prices, resulting in a direct materials price variance.
b.List two reasons why actual materials usage might differ from standard material usage, resulting in a direct materials quantity variance.

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Definitions:

Organic Product

A compound containing carbon, produced as the result of an organic reaction.

Reaction

A chemical reaction involves the transformation of one or more substances into different substances through the breaking and forming of chemical bonds.

Organic Product

A compound or material which results from the transformation of organic precursors in a chemical reaction, usually in organic synthesis.

Reaction

A process in which substances, the reactants, transform into different substances, the products.