An Unfavorable Materials Quantity Variance Indicates That

question 234

Multiple Choice

An unfavorable materials quantity variance indicates that:

• A) actual usage of material exceeds the standard material allowed for output.
• B) standard material allowed for output exceeds the actual usage of material.
• C) actual material price exceeds standard price.
• D) standard material price exceeds actual price.

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Definitions:

Ending Inventory

The total value of all unsold goods still available in stock at the end of an accounting period.

Absorption Costing

A calculation method in accounting that compiles all production-related costs, namely direct materials, direct labor, and every overhead cost (both variable and fixed), into the product's pricing.

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and treats fixed manufacturing overhead as an expense of the period.

Unit Product Cost

The total cost (both variable and fixed) associated with producing a unit of product, including materials, labor, and overhead.