The Purchasing Agent of an Organization Acquired Some Raw Materials

question 9

Multiple Choice

The purchasing agent of an organization acquired some raw materials at a bargain price, even though she knew that their quality was lower than that of the materials customarily used.This action resulted in a favorable raw materials purchase price variance that might very well have been more than offset by:

• A)an unfavorable raw materials usage variance.
• B)a favorable direct labor efficiency variance.
• C)an unfavorable variable overhead spending variance.
• D)an unfavorable direct labor rate variance.

---

Definitions:

Required Rate of Return

The minimum annual percentage return an investor expects to achieve from an investment, considering its risk.

Market Risk Premium

The additional return investors expect to receive from an equity investment over the risk-free rate, compensating for taking on higher risk.

Negative Beta

A measure indicating the inverse relationship between the return of a stock and the return of the overall market.

SML

Security Market Line, a graphical representation of the Capital Asset Pricing Model (CAPM) showing the relationship between the expected return of a security and its risk.