Higher Prices Are Likely to Result From

question 52

Multiple Choice

Higher prices are likely to result from:

• A) lower demand by consumers.
• B) increased production by business.
• C) lower interest rates.
• D) increased spending by consumers without increased production.
• E) an increase in the supply of a product.

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Definitions:

Materials Price Variance

The difference between the actual cost of raw materials and the standard cost expected to be paid, reflecting changes in price.

Raw Materials Price Variance

A measure of the difference between the actual cost of raw materials and the expected (standard) cost.

Labor Efficiency Variance

The difference between the budgeted and actual hours worked, multiplied by the standard labor rate, indicating efficiency in labor usage.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead rate multiplied by the actual activity level.