Multiple Choice
Which of the following is the correct adjusting entry to record the cost of supplies used during the accounting period?
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3. Accrual Accounting Concepts
Adjusting Entries: Supplies
Multiple Choice
An unfavorable materials quantity variance indicates that:
A
materials were purchased at a lower cost than the standard price
B
less materials were used than the standard allowed for actual production
C
more materials were used than the standard allowed for actual production
D
the actual output was higher than the budgeted output
Verified step by step guidance1
Understand the concept of a materials quantity variance: It measures the difference between the actual quantity of materials used and the standard quantity allowed for actual production, multiplied by the standard cost per unit of material.
Recognize that an unfavorable variance occurs when the actual quantity of materials used exceeds the standard quantity allowed for production. This indicates inefficiency or waste in the production process.
Analyze the options provided in the problem: The correct interpretation of an unfavorable materials quantity variance is that more materials were used than the standard allowed for actual production.
Eliminate incorrect options: For example, 'materials were purchased at a lower cost than the standard price' relates to a price variance, not a quantity variance. Similarly, 'less materials were used than the standard allowed' would result in a favorable variance, not an unfavorable one.
Conclude that the correct answer is: 'more materials were used than the standard allowed for actual production,' as this aligns with the definition of an unfavorable materials quantity variance.
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