The Materials Price Variance Should Be Computed

question 98

Multiple Choice

The materials price variance should be computed:

• A) when materials are purchased.
• B) when materials are used in production.
• C) based upon the amount of materials used in production when only a portion of materials purchased is actually used.
• D) based upon the difference between the actual quantity of inputs and the standard quantity allowed for output times the standard price.

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Definitions:

Stated Liquidation Value

The predetermined amount per share that shareholders are guaranteed to receive in the event of the company's liquidation as specified in the corporate charter or bond covenant.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that must be paid out before dividends to common stockholders, and with generally no voting rights.

Callable

Describes a financial security that the issuer has the right to redeem or 'call back' before its maturity date, often at a predetermined price.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, typically with dividend payments that are prioritized over those of common stock.