A company developed the following per unit materials standards for its product: 3 pounds of direct materials at $4 per pound. If 12.000 units of product were produced last month and 37,500 pounds of direct materials were used, the direct materials quantity variance was A) $3,600 favorable. B) $6,000 unfavorable. C) $3,600 unfavorable. D) $6,000 favorable. 11. The category that is generally considered to be the best measure of a company's ability to continue as a going concern is A) usually different from year to year. B) cash flows from operating activities. C) cash flows from financing activities. D) cash flows from investing activities. 12. Generally, the most important category on the statement of cash flows is cash flows from A) financing activities. B) significant noncash activities. C) operating activities. D) investing activities. 13. What is a standard cost? A) Any amount that appears on a budget B) The amount management thinks should be incurred to produce a good or service C) The total amount that appears on the budget for product costs D) The total number of units times the budgeted amount expected 14. Which of the following expenses would not appear on a selling and administrative expense budget? A) Indirect labor B) Depreciation C) Sales commissions D) Property taxes 15. The statement of cash flows A) must be prepared on a daily basis. B) summarizes the operating, financing, and investing activities of an entity. C) is another name for the income statement. D) is a special section of the income statement. Version 2 Page 3