Which of the following would be the most likely cause of an adverse material usage variance?
A) Use of cheaper (lower quality) of materials
B) Having to purchase materials at short notice (and higher price)
C) Increase in market prices
D) Labour overtime

Question

Quizplus · Accepted Answer

Using cheaper (lower quality) materials than budgeted would cause an adverse material usage variance as it would result in more materials being used to produce the same quantity of products. The other options - purchasing materials at short notice, increase in market prices, and labor overtime - would affect the material price variance rather than the material usage variance.

Which of the Following Would Be the Most Likely Cause