A favourable material price variance coupled with an unfavourable material usage variance would most likely result from
A)labour efficiency problems.
B)machine efficiency problems.
C)the purchase and use of higher than standard quality material.
D)the purchase and use of lower than standard quality material.

Question

Quizplus · Accepted Answer

A favourable material price variance indicates that the actual cost of the materials is less than the budgeted cost. An unfavourable material usage variance suggests that more materials were used than the budgeted amount. When the material price is lower than the standard cost, there may be a temptation to use more materials than necessary. This could be due to the purchase and use of lower than standard quality material, resulting in higher wastage or scrap. Thus, the purchase and use of lower than standard quality material is the most likely reason for a favourable material price variance coupled with an unfavourable material usage variance.

A Favourable Material Price Variance Coupled with an Unfavourable Material