The spending variance is Blank______.Multiple choice question.(AQ × AP) − (SQ × SP)(AQ × AP) − (AQ × SP)(AQ × SP) − (SQ × SP)

Break Down the Problem

1. Identify what each variable represents:
   • AQ = Actual Quantity
   • AP = Actual Price
   • SQ = Standard Quantity
   • SP = Standard Price

Relevant Concepts

2. The spending variance is calculated using the formula that compares actual expenses with expected expenses. The correct formula will take into account both actual quantities and prices versus standard quantities and prices.

Analysis and Detail

3. The options to consider are:
   • (AQ × AP) − (SQ × SP): This compares the actual spending against what the spending would have been if both quantities and prices were at standard levels.
   • (AQ × AP) − (AQ × SP): This calculates the difference in actual spending when comparing actual prices against standard prices, while keeping the actual quantities.
   • (AQ × SP) − (SQ × SP): This compares the spending based on actual quantities and standard prices against standard spending, which isn’t the standard approach for spending variance.

Verify and Summarize

4. The spending variance is commonly defined as the difference between actual costs and expected costs, which aligns with the first choice. The correct formula for spending variance is: $\text{Spending Variance} = (AQ \times AP) - (SQ \times SP)$

Final Answer

The spending variance is $(AQ \times AP) - (SQ \times SP)$.