Multiple Choice
A schedule of cost of goods manufactured includes all of the following costs except:
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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In a standard costing system, the materials price variance is calculated using the ______ quantity of the input purchased.
A
estimated
B
budgeted
C
actual
D
standard
Verified step by step guidance1
Understand the concept of materials price variance: It measures the difference between the actual cost of materials and the standard cost, based on the quantity of materials purchased.
Identify the formula for materials price variance: \( \text{Materials Price Variance} = (\text{Actual Price} - \text{Standard Price}) \times \text{Actual Quantity Purchased} \).
Clarify the role of 'actual quantity purchased': The variance calculation uses the actual quantity purchased because it reflects the real-world transaction, ensuring the variance is based on actual spending.
Distinguish between 'estimated,' 'budgeted,' and 'standard' quantities: These terms refer to planned or expected amounts, which are not used in the calculation of materials price variance.
Conclude that the correct quantity to use in the formula is the 'actual quantity purchased,' as it aligns with the definition and purpose of the variance calculation.
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