Which of the Following Could Be a Reason for a Favorable

question 7

Multiple Choice

Which of the following could be a reason for a favorable material price variance?

• A) the purchasing manager bargaining effectively with suppliers
• B) the purchasing manager giving orders for small quantity to reduce storage cost
• C) the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material
• D) the personnel manager hiring underskilled workers

---

Definitions:

Incremental Borrowing Rate

This rate is the interest a company would have to pay if it borrows funds, serving as a benchmark in lease agreements to determine lease liabilities and right-of-use assets.

Annual Payments

Payments made once a year, often related to loans, leases, or other financial agreements.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of the firm's financial condition.

Market Interest Rate

The prevailing rate of interest charged on loans and bonds in the financial markets.