An Unfavourable Materials Price Variance May Be Caused by

question 38

Multiple Choice

An unfavourable materials price variance may be caused by

• A)excessive rework.
• B)a special price offered by suppliers.
• C)use of experienced workers.
• D)none of the above.

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Definitions:

Planning Gap

The difference between a company’s current performance and its desired goals, often leading to strategic changes to bridge the gap.

Contribution Margin

A financial metric that represents the difference between sales revenue and variable costs, indicating how much revenue contributes to fixed costs and profit.

Break-Even Point

The point at which total costs match total revenue, meaning there is neither profit nor loss.

Sales Differential

Sales differential is the difference in sales volume between a company’s actual sales and a predetermined benchmark, such as past sales performance or market expectations.