LST Corporation Entered into a New Contract with One of Its

question 78

Multiple Choice

LST Corporation entered into a new contract with one of its raw material suppliers. The new contract required the supplier to deliver raw materials with a 24-hour notice from LST. This reduces LST's material handling costs, but has increased the cost of the raw materials delivered. Which of the following variances is most likely to result?

• A) Unfavorable direct material price variance
• B) Favorable direct price variance
• C) Unfavorable variable overhead spending variance
• D) Unfavorable fixed overhead spending variance

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