Let "AQ" = Actual Quantity of Direct Materials Issued to Production

question 173

Essay

Let "AQ" = actual quantity of direct materials issued to production, AP = actual price paid per unit of direct material purchased, SP = standard price per unit of direct material, and SP = standard quantity of direct materials allowed based on actual output for the period.
Required:
Use the above notation to develop a formula (i.e., an equation) for each of the following standard cost variances:
1. Direct materials price variance (calculated at point of production, not point of purchase).
2. Direct materials usage variance.
3. Flexible-budget (FB) variance for direct materials.
4. Joint price-quantity variance for direct materials.

---

Definitions:

Cognitive Psychologist

A type of psychologist who studies how people perceive, think, understand, and remember information, often focusing on processes such as learning, memory, and problem-solving.

Humanist

Pertains to a philosophical stance that emphasizes the value and agency of human beings, individually and collectively, often prioritizing human welfare, values, and dignity.

Behaviourist

A psychologist or a scholar who subscribes to behaviorism, focusing on observable behaviors and eliminating any subjective, mental processes from study.

Class Lectures

Formal presentations and instructional sessions conducted by a teacher or professor, intended to impart knowledge on a specific subject to students.