What Does a Favorable Direct Materials Price Variance Indicate

question 68

Multiple Choice

What does a favorable direct materials price variance indicate?

• A) The actual quantity of materials used was less than the standard quantity.
• B) The actual cost of materials purchased was less than the standard cost of materials purchased.
• C) The actual cost of materials purchased was greater than the standard cost of materials purchased.
• D) The actual quantity of materials used was greater than the standard quantity.

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Definitions:

Gut Feelings

Intuitive judgments or responses that are not the result of conscious reasoning.

Rational Assessments

Logical evaluations or judgments made based on reason and factual evidence.

Unconscious Processes

Psychological activities that occur without conscious awareness or intention, influencing thoughts, feelings, and behaviors.

Decision-Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.