An Unfavorable Direct Materials Efficiency Variance and a Favorable Direct

question 74

Multiple Choice

An unfavorable direct materials efficiency variance and a favorable direct materials price variance might indicate which of the following?

• A)Less expensive,inferior materials requiring more than the standard amount were used in production
• B)Less expensive,inferior materials requiring less 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:

Fixed Cost

Costs that do not fluctuate with changes in production level or sales volume, such as rent or salaries.

Miller-Orr Model

A financial model used to manage cash flows and determine optimal cash reserves for a company.

Monthly Disburses

This refers to the process of distributing or paying out funds at regular monthly intervals.

Cheque Delay

A situation where there is a postponement in the processing or clearance of a cheque by a bank.