Which of the Following Situations Would Lead to a Favorable

question 216

Multiple Choice

Which of the following situations would lead to a favorable direct materials price variance?

• A)The purchasing manager was able to negotiate a lower purchase price for raw materials.
• B)A vendor shipped a greater quantity of raw materials than ordered.
• C)The purchasing manager paid a premium price for a higher quality of raw materials.
• D)Raw materials waste was substantially reduced in the factory.

---

Definitions:

Economic Activities

Activities that involve the production, distribution, and consumption of goods and services within an economy.

Absolute Advantage

The capability of a country or individual to produce more of a good or service with the same amount of resources as competitors.

Opportunity Cost

The price paid for not selecting the next most favorable opportunity when deciding.

Production Possibilities Frontier

A curve that depicts all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.), assuming all are used efficiently.