Direct materials variance is calculated as the difference between actual cost and standard cost. If actual cost is $150,000 and standard cost is $152,000, what is the variance?

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Multiple Choice

Direct materials variance is calculated as the difference between actual cost and standard cost. If actual cost is $150,000 and standard cost is $152,000, what is the variance?

Explanation:
Direct materials variance is found by subtracting the standard cost from the actual cost. Here, 150,000 − 152,000 = −2,000. A negative result means actual costs were lower than planned, which is favorable. So the variance is a $2,000 favorable difference.

Direct materials variance is found by subtracting the standard cost from the actual cost. Here, 150,000 − 152,000 = −2,000. A negative result means actual costs were lower than planned, which is favorable. So the variance is a $2,000 favorable difference.

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