The purchasing manager was able to bring down the cost of direct materials by purchasing direct materials of a slightly lower grade quality than the company had used previously.The lower grade of direct materials,however,meant a higher defect rate on the assembly line and a higher waste of direct materials during production,which in turn lowered operating income.This would have led to a(n)________.
A) unfavorable direct materials cost variance
B) favorable direct labor cost variance
C) favorable direct labor efficiency variance
D) unfavorable direct materials efficiency variance

Question

Quizplus · Accepted Answer

The higher defect rate and increased waste due to the use of lower-grade materials directly impact the efficiency of using these materials, leading to an unfavorable direct materials efficiency variance. This variance indicates that more materials were used than had been planned for the actual output, reflecting inefficiency in material usage.

The Purchasing Manager Was Able to Bring Down the Cost