A Favorable Materials Price Variance Coupled with an Unfavorable Materials

question 15

Multiple Choice

A favorable materials price variance coupled with an unfavorable materials usage variance would most likely result from: (CMA adapted)

• A) machine efficiency problems.
• B) product mix production changes.
• C) labor efficiency problems.
• D) the purchase of lower-than-standard-quality materials.

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Definitions:

Large-cap Indexes

Large-cap Indexes track the performance of stocks from companies with large market capitalization, reflecting the overall health and trends of major corporations.

Nasdaq Composite

An index of all the stocks and similar investments listed on the Nasdaq stock market, often used as a benchmark for technology and biotech securities.

Modified Duration

A measure of the sensitivity of the price of a bond or a bond portfolio to a change in interest rates, adjusted for the possibility that the bond may be called before maturity.

Basis Point

A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equivalent to 0.01%.