Which of the Following Can Be a Reason for a Favorable

question 91

Multiple Choice

Which of the following can be a reason for a favorable price variance for direct materials?

• A) a decrease in the price of materials due to an oversupply of materials
• B) an unexpected increase in the price of materials
• C) less amount of material used during production than planned for actual output
• D) workers taking less time to produce the products

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Definitions:

Unit Sales

The volume of product sold, representing a key measure of a company's performance and sales activity.

Variable Expense

Expenses that change in proportion to the amount of goods produced or the volume of sales, like materials or commissions on sales.

Selling Price

The amount of money for which a product or service is sold to customers, setting the revenue baseline for a business.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs and profit.