The Flexible Budget Breaks Down into the Price and Quantity

question 191

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:

Craves

Strongly desires or yearns for something or someone.

Ironic Processing

The psychological process where attempts to suppress certain thoughts make them more likely to surface.

Thought Suppression

The process of consciously attempting to avoid thinking certain thoughts.

Party

A social gathering of invited guests, typically involving eating, drinking, and entertainment.