A Favorable Direct Materials Price Variance Might Lead to an Unfavorable

question 127

True/False

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased cheap materials.

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Definitions:

Higher Prices

An increase in the cost to purchase goods and services, which can impact consumer behavior and inflation rates.

Horizontal Demand

A market condition where the demand for a product remains constant despite changes in its price.

Marginal Cost

The cost incurred by producing one additional unit of a product or service, which can vary depending on the level of production.

Same Product

Refers to goods or services that are identical in features, quality, and performance, providing no substantial difference to consumers.