A Company Uses Sugar in Producing Its Product

question 89

Multiple Choice

A company uses sugar in producing its product. If the price of sugar doubles, which variance is directly impacted?

• A)Direct materials quantity variance
• B)Direct materials price variance
• C)Direct labor rate variance
• D)Direct labor efficiency variance

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Definitions:

Fair Value

The estimated market value of an asset or liability, reflecting the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Common Stock

A form of corporate equity ownership, a type of security representing ownership in a corporation and gives rights to dividends and voting in company matters.

Acquisition

The process of obtaining control of another company or business entity through purchase or merger.

Consolidated Inventory

The aggregate amount of inventory held across all subsidiaries of a parent company, combined in the financial statements to present a total inventory figure for the entire corporate group.