Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 10 - Standard Costs and Variances - Questions - Page 448: 10-2

Answer

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Work Step by Step

Variances in price and quantity required different responses for control purposes, thus both have to be separately calculated. Price variance tells about the cost of inputs and any price variances are not internally controlled. Price variances can be controlled by changing suppliers. Quantity variances tell about the input quantity of raw materials. This can be controlled for example by reducing waste, training labour and improving machines.
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