A. price variance is favourable
B. price variance is unfavourable
C. cost variance is favourable
D. cost variance is unfavourable
✅ The correct answer is option A.
Actual price of material is less than budgeted price, this means that price variance is favourable. A price variance is the difference between the actual revenue or cost and the budgeted revenue or cost because of a difference between the actual unit price and the budgeted unit price.
Actual price of material is less than budgeted price, this means that price variance is favourable. A price variance is the difference between the actual revenue or cost and the budgeted revenue or cost because of a difference between the actual unit price and the budgeted unit price.