The Flexible-Budget Variance for Materials Is $2,000 (U)

question 153

Multiple Choice

The flexible-budget variance for materials is $2,000 (U) . The sales-volume variance is $18,000 (U) . The price variance for material is $38,000 (F) . The efficiency variance for direct manufacturing labor is $12,000 (F) . Calculate the efficiency variance for materials.

• A) $40,000 favorable
• B) $18,000 unfavorable
• C) $6,000 favorable
• D) $40,000 unfavorable

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Definitions:

Identification

The process of determining or establishing the identity of a person or thing.

Risk of Loss

Refers to the possibility that an asset's value could decrease due to a variety of factors, potentially resulting in financial loss for the holder.

Title

The legal right to own, use, or dispose of property; often evidenced by a document.

Insurable Interest

(1) In contract law, a property interest in goods being sold or leased that is sufficiently substantial to permit a party to insure against damage to the goods. (2) In the context of insurance, an interest in a person’s life or well-being that is sufficiently substantial that insuring against the person’s death or injury does not amount to a mere wagering contract.