If a Purchasing Agent Is Able to Negotiate a Price

question 181

Multiple Choice

If a purchasing agent is able to negotiate a price lower than that set by the current budget by purchasing direct materials of similar quality

• A)a reduction in customer service costs will result.
• B)the effect on the direct materials efficiency variance will be favourable.
• C)the effect on the direct labour efficiency variance will be favourable.
• D)the effect on the purchase rate variance will be favourable.
• E)the effect on the direct materials efficiency variance will be unfavourable.

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Definitions:

Dual Capacity

Refers to a situation where an entity or person functions in more than one role or capacity, often leading to different sets of responsibilities and rights.

Principals

The main parties involved in a business transaction or agreement, usually responsible for entering into a contract.

Agent

An individual or entity authorized to act on behalf of another (the principal) in transactions or other matters.

Duty Of Obedience

The requirement for directors and officers of an organization to act in accordance with its goals and directives.