Purchasing a Higher Quality of Materials Than Is Specified by the Standard

question 145

Multiple Choice

Purchasing a higher quality of materials than is specified by the standard will likely result in

• A)a favorable price variance.
• B)an unfavorable quantity variance.
• C)an unfavorable price variance.
• D)a favorable price variance and an unfavorable quantity variance.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or business activity within a certain scale or period.

Rent Out

The act of leasing or renting one's property to another party in exchange for payment.

Joint Costs

Costs that are incurred in the process of producing two or more products or services simultaneously and are not readily assignable to individual products.

Inventory Valuation

The method used by businesses to assess the value of their inventory, taking into account the cost of acquiring or producing the goods and any market changes.