An Unfavorable Price Variance for Materials Means That

question 85

Multiple Choice

An unfavorable price variance for materials means that

• A)the actual cost of the materials was more than the standard cost.
• B)more materials were used in production than anticipated.
• C)more labor hours were required to work with the materials than expected.
• D)the actual cost of the materials was more than the budgeted amount.

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Definitions:

Indirect Labor

Workers or labor costs that support the production process but are not directly involved in the creation of the product.

Supplies

Items or materials used in the production process or in the operation of a business.

Fixed Overhead Volume

refers to the portion of fixed overhead costs that is associated with the production volume, used in calculating efficiency and profitability.

Standard Machine-Hours

A measure used in manufacturing to allocate costs to products based on the estimated number of hours the machinery is used.