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    PracticeCPA®CPA BAR Practice Exam 5Question 33
    Easy1 markMultiple Choice
    Area I: Business AnalysisCost AccountingVariance Analysis

    CPA · Question 33 · Area I: Business Analysis

    Which of the following events would likely result in an unfavorable Direct Materials Price Variance?

    Answer options:

    A.

    Purchasing materials in larger quantities to get a bulk discount.

    B.

    A switch to a higher-quality supplier with better grade materials.

    C.

    A decrease in the market price of raw materials.

    D.

    Using less material than standard per unit.

    How to approach this question

    Price Variance = (Actual Price - Standard Price). Unfavorable means Actual > Standard. Look for reasons why price would increase.

    Full Answer

    B.A switch to a higher-quality supplier with better grade materials.✓ Correct
    An unfavorable price variance occurs when the actual price paid is higher than the standard price. Switching to higher-quality materials typically increases the purchase price.

    Common mistakes

    Confusing price variance with usage variance.
    Question 32All questionsQuestion 34

    Practice the full CPA BAR Practice Exam 5

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