A favorable materials price variance coupled with an unfavorable materials usage variance would most likely result from (CMA adapted)
A)Machine efficiency problems.
B)Product mix production changes.
C)Labor efficiency problems.
D)The purchase of lower-than-standard-quality materials.

Question

Quizplus · Accepted Answer

A favorable materials price variance means that the company paid less for materials than it had budgeted for. This could occur if lower-than-standard-quality materials were purchased. An unfavorable materials usage variance means that the company used more materials than it had budgeted for, which could result from inefficiencies in production or labor. Therefore, the combination of these variances could occur if lower-quality materials were purchased at a lower cost, but they ended up being used inefficiently, resulting in increased usage and waste.

A Favorable Materials Price Variance Coupled with an Unfavorable Materials