Abita Manufacturing Has Prepared the Following Flexible Budget for October

question 110

Multiple Choice

Abita Manufacturing has prepared the following flexible budget for October and it is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.

-The MOST LIKELY explanation of the above variances for Material A is that:

• A)a lower price than expected was paid for Material A.
• B)higher quality raw materials were used than were planned.
• C)the company used a new supplier.
• D)Material A used during October was $2,000 less than expected.

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Definitions:

Prices Received

The amount of money received by producers or sellers in exchange for goods or services in the market.

Prices Paid

Refers to the amount of money expended by a buyer to acquire goods or services.

Parity Ratio

A measure comparing the value of one set of goods or services to another, often used in agriculture and international trade.

Agricultural Subsidies

Financial assistance programs provided by the government to farmers and agribusinesses to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.