Information on Fleming Company's Direct Material Costs Follows What Was the Company's Direct Material Price Variance?
A) $1,000

question 114

Multiple Choice

Information on Fleming Company's direct material costs follows: $\begin{array} { l c } \text { Actual amount of direct materials purchased and used } & 20,000 \text { kilograms } \\\text { Actual direct material costs } & \$ 40,000 \\\text { Standard price of direct materials } & \$ 2.10 \text { per kilogram } \\\text { Direct materials quantity variance - favourable } & \$ 3,000\end{array}$ What was the company's direct material price variance?

• A) $1,000 favourable.
• B) $1,000 unfavourable.
• C) $2,000 favourable.
• D) $2,000 unfavourable.

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Definitions:

Net Income

The net earnings of a company following the deduction of all costs, such as taxes and operational expenses, from its total income.

Limited Life

A feature of certain business entities where the business has a defined end date or event upon which it will dissolve.

Unlimited Liability

A legal obligation where a business owner or partner is personally responsible for all of the debts of the business.

Mutual Agency

A business principle where each partner in a partnership can act on behalf of the partnership, binding it contractually.