Which of the Following Would Create an Unfavorable Price Variance

question 6

Multiple Choice

Which of the following would create an unfavorable price variance beyond the control of the manager?

• A) An increase in demand and/or reduction in supply of an input
• B) Unnecessary use of overtime
• C) An increase in the number of activities, i.e., test or procedures ordered
• D) An increase in the number of activities, i.e., tests and procedures that must be redone due to errors

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Definitions:

Fundamental Analysis

Assessment of firm value that focuses on earnings and dividends prospects, expectations for future interest rates, and risk evaluation.

Earnings

The amount of money that a company makes during a specific period, usually defined as profit after all expenses have been subtracted from revenue.

Dividends

Payments made by a corporation to its shareholder members, typically a portion of the earnings decided by the board of directors.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in generating sales revenue from its assets.