A Material Price Variance of $5000 (Unfavourable) for a Period

question 71

Multiple Choice

A material price variance of $5000 (unfavourable) for a period has been calculated. The actual unit price was $9.00. The actual quantity of material used was 6000. The standard quantity of materials was 5000. Calculate the standard unit price for a unit of raw materials for the period (round where necessary) .

• A) $5.00
• B) $8.00
• C) $8.17
• D) $9.83

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Definitions:

Perfectly Negatively Correlated

A relationship between two securities in which one's price moves in the opposite direction of the other's, resulting in a correlation coefficient of -1.

Standard Deviation

A statistical measure of the dispersion or variability of a set of data points, often used in finance to quantify the risk of an investment.

Risk Aversion

The preference of investors to avoid risk, leading them to invest in safer securities with lower potential returns.

Optimal Risky Portfolio

A collection of financial investments that has the highest expected return for a given level of risk.