True, the materials price variance is computed based on the number of materials purchased during the period.
The price variance is calculated by multiplying the actual unit cost of an item by the actual number of units actually purchased, minus the standard cost. The calculation for the price difference is
(Actual Cost Incurred - Standard Cost) x Actual Quantity of Units Bought
= Price Difference.
The advantageous price variance is one where the actual cost incurred is lower than the standard cost. This is known as an unfavorable price variance if the actual cost incurred is higher than the standard cost.
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