An Unfavorable Materials Price Variance May Be Caused by

question 14

Multiple Choice

An unfavorable materials price variance may be caused by

• A) excessive rework
• B) a special price offered by suppliers
• C) use of experienced workers
• D) none of the above

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Definitions:

Fixed Overhead Budget Variance

The difference between the budgeted fixed overhead costs and the actual fixed overhead incurred.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, providing predictability to a business's expenses.

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain level of output, valued at the standard labour rate.

Credit Balance

An account balance that shows money owed to the account holder, often indicating a creditor position in financial records.