alleryStart learning →A favorable material price variance is described as possibly causing an unfavorable:
ATax provision variance
BLabor efficiency variance
CSales revenue variance
DInterest expense variance
Answer & Solution
Correct answer: B. Labor efficiency variance
1. Variances can be linked to each other.
2. Buying cheaper materials produces a favorable material price variance.
3. In such a situation, a favorable material price variance could cause an unfavorable labor efficiency variance.
4. It could also cause an unfavorable material quantity variance.
_Source: OpenStax Principles of Accounting, Volume 2: Managerial Accounting (CC BY-NC-SA 4.0), Ch 8 'Standard Costs and Variances'_
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Related questions
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