What does a cost variance measure?

A. the volume discounts companies receive when ordering direct materials in large quantities.

B. how well the business keeps unit costs of material and labor inputs within standards.

C. the change in costs over time.

D. the difference between the cost the company pays and the cost its competitors pay.

Question

Liliana

Social Studies

27 November, 11:46

What does a cost variance measure?

A. the volume discounts companies receive when ordering direct materials in large quantities.

B. how well the business keeps unit costs of material and labor inputs within standards.

C. the change in costs over time.

D. the difference between the cost the company pays and the cost its competitors pay.

+2

Answers (1)

Know the Answer?

Wyatt Rose · Answer 1

Option B.

Explanation:

How well the business keeps unit costs of material and labor inputs within standards, is the right answer.

The difference between the actual amount of a cost and its planned amount is known as a cost variance. This cost variance is an essential part of the standard costing system employed some of the businesses. In such an arrangement, the cost fluctuations direct recognition to the contrast between 1) the standard, planned and foreseen costs of the commodity production and 2) the real production costs incurred. Therefore, cost variance estimates how well the company keeps unit costs of supply and labor inputs within measures.