The actual cost less the actual quantity at standard price equals the direct materials price variance. The difference between the actual quantity at standard price and the standard cost is the direct materials quantity variance. The difference in the quantity is multiplied by the standard price to determine that there was a $1,200 favorable direct materials quantity variance.
Common Problems with Direct Material Price Variance
A negative value of direct material price variance is unfavorable because it means that the price paid to purchase the material was higher than the target price. Material Price Variance is the...