Which of the Following Situations May Lead to a Favorable

question 116

Multiple Choice

Which of the following situations may lead to a favorable direct materials price variance?

• A)The purchasing manager was able to negotiate a lower purchase price for raw materials.
• B)A vendor shipped a greater quantity of raw materials than ordered.
• C)The purchasing manager paid a premium price for a higher quality of raw materials.
• D)Raw materials waste was substantially reduced in the factory.

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Definitions:

Reissuance

The process of re-releasing previously issued shares back into the market, often after they've been bought back by the company.

Treasury Stock

Shares that were once issued and outstanding but were later bought back by the company, reducing the amount of outstanding stock on the open market.

Cash Dividend

A payout from a corporation's profits, determined by its board of directors, provided to a specific group of its stockholders as cash.

Authorized Shares

The maximum number of shares that a corporation is legally permitted to issue, as outlined in its articles of incorporation.