4. A company has bought a material at a price lower than the standard price. How

Question

4. A company has bought a material at a price lower than the standard price. However, the material's quality is not as good as expected. As a result, will be likely to be favorable A. Price variance B. Quantity variance c. Both price and quantity variances o. Neither price nor quantity variance 5. The following report is given for a blood bank, which collects donated blood to help needy patients. The company will investigate variances for two of the following items Which two should be investigated? Actual Budget I. Medical Supplies II. Blood Tests III Administratiorn IV. Equip $1,040 1,580 3,300 1,480 $1,000 2,000 3,000 1,200 Equipment A. I and II B. II and III C. and IV D. II and IV

Explanation / Answer

4) answer : A. Price variance

=>As purchase price is less than the budgeted price, so benefit on purchases to that of budgeted price will provide us favourable price variance.

5) answer : D. III and IV

=> Being Administration and equipment has been over consumed to that of budgeted valued by 10% or over.

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