The Direct Materials Mix Variance Will Be Favourable When

question 3

Multiple Choice

The direct materials mix variance will be favourable when

• A)the flexible-budget contribution margin is greater than the actual contribution margin.
• B)the actual direct materials input mix is less expensive than the budgeted direct materials input mix.
• C)the actual quantity of total inputs used is greater than the flexible budget for total inputs.
• D)actual unit sales are less than budgeted unit sales.
• E)the input-efficiency variance is favourable.

---

Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the cost per unit of output decreases with increasing scale.

Horizontal Merger

The combination of two or more firms competing in the same market with the same good or service.

Horizontal Merger

A merger between companies that operate in the same industry, often as direct competitors.

Supplier-Customer Relationships

This term refers to the interactions and dealings between a business that provides products or services and its buyers.