Denmark Corporation's Variance Report for the Purchasing Department Reports 1000

question 228

Multiple Choice

Denmark Corporation's variance report for the purchasing department reports 1000 units of material A purchased and 2400 units of material B purchased. It also reports standard prices of $2 for Material A and $3 for Material B. Actual prices reported are $2.10 for Material A and $2.80 for Material B. Denmark should report a total price variance of

• A) $380 F.
• B) $340 F.
• C) $340 U.
• D) $380 U.

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Definitions:

Unemployment

Unemployment describes the situation where individuals who are willing and able to work are not currently employed.

Natural Rate

The long-term unemployment rate reflecting the number of people who are jobless due to the economic structure, without accelerating inflation.

Time Inconsistency

A situation in which a decision-maker's preferences change over time, such that what is preferred at one point in time is inconsistent with what will be preferred at a future point in time, leading to potentially suboptimal decisions.

Political Business Cycle

A theory that suggests that politicians manipulate the economy (typically through monetary policy) to achieve favorable outcomes (such as lower unemployment or higher growth) before elections to improve their chances of being re-elected.