The Production of a Company Was Experiencing a High Defect

question 64

Multiple Choice

The production of a company was experiencing a high defect rate on the assembly line,which was slowing down the production and causing wastage of valuable materials.The production manager decided to recruit some highly skilled production workers from another company to bring down the defect rate,but was worried that the higher wages of these workers might negatively affect operating income.This situation would have produced a(n) _______

• A)unfavorable direct materials cost variance.
• B)favorable direct labor cost variance.
• C)favorable direct labor efficiency variance.
• D)unfavorable direct materials efficiency variance.

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Definitions:

Convertible Notes

Debt securities that can be converted into a predetermined number of the issuer's equity shares, usually at the option of the holder.

Interest Expense

The cost incurred by an entity for borrowed funds, generally calculated as the interest rate times the principal amount of the debt.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's stock at certain times during the bond's life, usually at the discretion of the bondholder.

Option Pricing Methods

Strategies or models used to determine the fair value of options, considering factors like the underlying asset's price, volatility, time until expiration, and interest rates.