Material Price Variance MCQS Multiple Choice Questions

1. Material price variance is calculated in:

Process costing

Standard costing

Batch costing

2. The purpose of material price variance is to identify differences between material actual and standard cost

True

False

3. Material price variance is favorable when:

Material actual cost < standard cost

Material actual cost > standard cost

4. Favorable material price variance arises due to:

Purchase of low quality material than the standard

Decrease in the value of raw materials

Good price negotiation with vendors

All of the above

5. Purchase discount on bulk orders leads due:

Favorable material price variance

Adverse material price variance

No effect

6. Hike in prices of materials could lead:

Favorable material price variance

Adverse material price variance

No effect

7. Inefficient buying skills with respect to price negotiation leads to:

Favorable material price variance

Adverse material price variance

No effect

8. If material standard cost is $ 26,668/- & actual cost $ 25,419, the material price variance will be:

1913 adverse

1913 favorable

1249 favorable

9. Standard cost is based on:

Management’s decision

Auditor’s decision

Store keeper’s decision

10. Material price variance is an effective tool of:

Process costing

Standard costing

Budgeting

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