Other Things the Same,an Unexpected Fall in the Price Level

question 65

Multiple Choice

Other things the same,an unexpected fall in the price level results in some firms having

• A)lower than desired prices,which increases their sales.
• B)lower than desired prices,which depresses their sales.
• C)higher than desired prices,which increases their sales.
• D)higher than desired prices,which depresses their sales.

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, valued at standard cost.

Favorable

A term used in variance analysis indicating that actual costs were lower than budgeted or standard costs, leading to higher profits.

Unfavorable

A term used in variance analysis to describe a situation where actual results are worse than expected results, often leading to a negative impact on financial performance.

Raw Materials Price Variance

This variance highlights the difference between the actual cost of raw materials used in production and the standard or expected cost.