Management Accounting Uses Variance Analysis to Explain What and Why

question 22

Multiple Choice

Management accounting uses variance analysis to explain what and why something happened in the cost of producing products. It is done by comparing actual outcomes to expected, or standard, costs. What is the expectation when the usage of raw materials unexpectedly decreases below the standard quantity used?

• A) Unfavorable price variance
• B) Favorable price variance
• C) Unfavorable quantity variance
• D) Favorable quantity variance

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