LST Entered into a New Contract with One of Its

question 53

Multiple Choice

LST entered into a new contract with one of its raw material suppliers. The new contract required the supplier to deliver raw materials with a 24-hour notice from LST. This reduces LST's material handling costs, but has increased the cost of the raw materials delivered. Which of the following variances is most likely to result?

• A) Unfavorable direct material price variance
• B) Favorable direct price variance
• C) Unfavorable variable overhead spending variance
• D) Unfavorable fixed overhead spending variance

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Definitions:

Interdependence

A situation in which two or more elements or systems rely on each other to function properly, often seen in economic, social, and ecological systems.

Economic

Pertaining to the production, consumption, and transfer of wealth in a region or society.

Cultural

Pertaining to the ideas, customs, social behaviors, and characteristics of a particular society, group, place, or time.

Technological

Relating to or involving technology, especially in regard to its development, use, or impact in society and business.