A Favorable Direct Materials Price Variance and an Unfavorable Direct

question 20

Multiple Choice

A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?

• A)Less expensive, inferior materials requiring less than the standard amount were used in production.
• B)Less expensive, inferior materials requiring more than the standard amount were used in production.
• C)More expensive, superior materials requiring more than the standard amount were used in production.
• D)More expensive, superior materials requiring less than the standard amount were used in production.

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Definitions:

Returns to Scale

The change in output as a result of proportionately changing all inputs in the production process.

Student Enrollment

The process through which students register or enter into a course of study at educational institutions.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Average Total Cost

The total cost of production divided by the total quantity of output, representing the cost per unit of output.