Discussion
The material price variance arises because of .................. .
Answer: C
A material price variance can arise from loss of cash discount.
The variance is (standard price - actual price) × actual quantity, so it reflects only what was paid per unit. Causes include a change in market price, buying in uneconomic lots, emergency purchases, a change in freight, and losing a cash or quantity discount, which raises the effective price paid.
The other causes affect quantity, not price. A non-standard mixture produces a mix variance, while pilferage and careless use of material produce an adverse usage (quantity) variance.
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