Miller Company Has an Unfavorable Materials Price Variance

question 90

Multiple Choice

Miller Company has an unfavorable materials price variance. Which of the following would be the least likely reason for this variance?

• A) The company purchased a higher quality material than was budgeted.
• B) The company could not take advantage of quantity discounts.
• C) The company used more material than was budgeted for in each unit.
• D) The company under budgeted the standard price for materials.

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Definitions:

Partial Equity Method

An accounting approach where an investor recognizes income from its investment in an associate to the extent of dividends received, differing from the full equity method which recognizes income as it's earned by the associate, regardless of dividends received.

Fair Value

The exchange value of an asset or the settlement cost of a liability in a well-arranged transaction with participants in the market on the measurement occasion.

Book Value

The net value of a company's assets minus its liabilities, often used as a measure of the company's worth.

Equipment

Tangible property used in the operation of a business that is not intended for sale, including machinery, tools, and vehicles.