When the price variance is $30 and the budgeted input price is $80, the actual price would be _____________?
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Answer: C. $110
Explanation
Actual price equals budgeted input price plus the price variance amount. Adding eighty dollars and thirty dollars results in one hundred ten dollars actual price. This calculation determines the true unit purchase price paid by the business. Material price variance evaluates differences between actual and standard purchase prices. Budgeted input price represents the standard cost expected for material units. Standard costing helps organizations maintain tight financial control over purchases.
Supply chain managers monitor price variances to manage procurement budgets effectively. Cost accountants analyze purchasing deviations to explain monthly financial statement results. Accurate price tracking ensures businesses control material costs in competitive markets. Option A introduces an incorrect negative sign into the price calculation. Option B suggests a negative price value which is impossible in commerce. Option D underestimates the actual price by subtracting the variance incorrectly.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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