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The formula to compute direct materials price variance is to calculate the difference between a. actual costs - (actual quantity * standard price) b. actual cost + standard costs c. actual cost - standard costs d. (actual quantity * standard price) -standard costs ANS: A DIF: Moderate OBJ: 23-03 NAT: AACSB Analytic | IMA-Performance Measurement 51.
Suppose that the business has set the standard direct materials cost at $20 per unit but actually purchases the materials later at $25 per unit for100 units for a total of $2,500.tep 2. Calculate direct material price variance. As actual direct materials costs become known when a purchase has been completed, a business will compare the difference between actual and standard cost by calculating the direct materials price variance.