A company is reviewing the variances for the previous month:

Which of the following statements is most likely to be INCORRECT?
A) There is an adverse variance overall. This could be due to the standard being out of date
B) The large favourable price variance on Material X indicates that buyers have found the best deal for the company
C) The favourable labour rate and adverse efficiency variances could be the result of using new, inexperienced staff
D) An adverse labour rate variance could be the result of a recent pay rise

Question

A company is reviewing the variances for the previous month:

Which of the following statements is most likely to be INCORRECT?
A) There is an adverse variance overall. This could be due to the standard being out of date 
B) The large favourable price variance on Material X indicates that buyers have found the best deal for the company 
C) The favourable labour rate and adverse efficiency variances could be the result of using new, inexperienced staff 
D) An adverse labour rate variance could be the result of a recent pay rise

Quizplus · Accepted Answer

Although the material X might be cheaper, it could be that it is lower quality - the workforce have used more, resulting in an overall £20 adverse variance.

A Company Is Reviewing the Variances for the Previous Month