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Are standards designed to evaluate price and quantity variances separately?
True
When computing standard cost variances the difference between actual and standard price multiplied by actual quantity yields what?
Price Variance
Why are variances generally segregated in terms of a price variance and a quantity variance?
Variances are segregated into price variance and quantity variance to provide clearer insights into the factors affecting cost performance. Price variance measures the impact of changes in the price of inputs, while quantity variance assesses the effect of differences in the amount of inputs used. This separation allows managers to pinpoint specific areas for improvement, enabling more targeted decision-making and corrective actions. By analyzing these variances independently, organizations can better understand their operational efficiency and cost control.
What is cost price variances?
Price variance is the actual unit cost minus the standard unit cost, multiplied by the actual quantity purchased. The variance is said to be unfavorable if the actual price of the materials is higher than the standard price of the materials.
Are Standard costs determined by multiplying expected price by expected quantity?
Yes, standard costs are typically determined by multiplying the expected price of inputs by the expected quantity needed for production. This method helps businesses establish a baseline for budgeting and performance evaluation. By setting these standards, companies can compare actual costs against expected costs to identify variances and areas for improvement.
How do you find equilibrium quantity and price?
Quantity and price are proportional .as the price increases ,quantity is increases .as quantity is less and cheap then the market price fell down..example are cellphone ,electronics items etc.
If the price is less than the equilibrium price what is the relatiionship of quantity supplied to quantity demanded?
If the price is low, suppliers may well not wish to supply the full quantity that is demanded by consumers.The quantity demanded and quantity supplied determines the equilibrium price in the market. The quantity where these two are equal, that is where the market price is set.
Why are variances generally segregated in terms of a price variance and an efficiency variance?
Efficiency Varian materials and direct labor, the variances were recorded in specific general ledger accounts.
At equilibrium price the quantity is demanded always equal to the quantity supplied?
Yes, the equilibrium price equates the quantity supplied to the quantity demanded.
A decrease in demand will have what effect on equilibrium price and quantity?
There will be a decrease in price and quantity.
When quantity demanded is greater than quantity supplied the price will?
the price increase
What is the price called at which the quantity demanded is equal to the quantity supplied?
equilibrium price
