Question

If the purchasing manager purchased a greater quantity of raw materials than budgeted, but paid the Standard Price (SP), which variance may be affected?A) Materials price varianceB) Materials quantity varianceC) Both of the variances may be affectedD) Neither of the variances may be affected

Answer 1

Answer:

B) Materials quantity variance

Explanation:

Provided that actual and standard price per raw material is same, therefore the price variance will be 0 as there is no difference.

Also provided that actual quantity is more than budgeted, therefore there will be an impact on material quantity variance.

As Material Quantity Variance = (Standard Quantity - Actual Quantity) $\times$ Standard Price

Since here actual quantity will be more than standard, there will be an unfavorable variance.

Thus correct option is,

B) Materials quantity variance