A Favorable Materials Price Variance Will Occur When

question 5

Multiple Choice

A favorable materials price variance will occur when:

• A)Actual costs of materials were less than budgeted
• B)More material was used than was budgeted
• C)Actual cost of materials were greater than budgeted
• D)Less material was used than was budgeted

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Definitions:

Direct Labor Budget

A detailed plan that shows the amount of direct labor hours required to meet production needs and the associated costs.

Direct Labor-Hours

Hours attributed to workers who are directly involved in the creation or assembly of a company's products.

Budgeted Production

The planned level of production output, determined as part of a company's budgeting process to meet expected demand and inventory requirements.

Direct Labor Cost

The total cost of wages paid to employees who are directly involved in the production of goods or services.