A Favorable Price Variance for Direct Materials Indicates That

question 119

Multiple Choice

A favorable price variance for direct materials indicates that:

• A)a lower price than expected was paid for materials.
• B)a higher price than expected was paid for materials.
• C)less material was used during production than planned for actual output.
• D)more material was used during production than planned for actual output.

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Definitions:

Indifference Curve

A graph representing combinations of goods or services among which a consumer is indifferent.

Substitution

The process of replacing one good or service with another, often due to changes in relative prices, quality, or availability.

Marginal Rate

A measure of the change in a variable (often cost, revenue, or profit) as it relates to a unit change in another variable.

Substitution

The economic principle describing how consumers or producers switch between goods or resources as relative prices or availability change.