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.

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Definitions:

Investing Activities

Financial actions that involve the purchase and sale of long-term assets and investments not included in cash equivalents.

Net Cash

The amount of cash available after accounting for cash inflows and outflows, used to measure liquidity and cash position of a business.

Marketable Securities

Financial instruments and assets that can be easily converted into cash without significant loss of value.

Financing Activities

Transactions and events that affect long-term liabilities and equity, such as issuing debt or equity, repurchasing shares, and paying dividends.