A favourable material price variance coupled with an unfavourable material usage variance would most likely result from:
A) problems with processing machines.
B) the purchase of low quality materials.
C) problems with labour efficiency.
D) changes in the product mix.

Question

Quizplus · Accepted Answer

A favourable material price variance means that the actual cost of materials purchased was less than the expected cost, which could result from purchasing low quality or cheaper materials. However, an unfavourable material usage variance means that more materials were used than expected, which could be due to problems with labour efficiency or processing machines. Changes in the product mix may affect both the price and usage variances, but it is less likely to cause an opposite effect. Therefore, the best choice is B, the purchase of low quality materials.

A Favourable Material Price Variance Coupled with an Unfavourable Material