alleryStart learning →Alongside labor efficiency, a favorable material price variance could also cause an unfavorable:
ALabor rate variance paid
BOverhead spending rate
CMaterial quantity variance
DMaterial price variance
Answer & Solution
Correct answer: C. Material quantity variance
1. Cheap materials can go wrong in more than one way.
2. A favorable material price variance could cause an unfavorable labor efficiency variance.
3. It could also cause an unfavorable material quantity variance.
4. Poor quality material is wasted as well as slow to work.
_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
Complete the variance rulesMatch each variance termStack the variance termsSort the variancesPull the rope to favorable or notSpending exactly the standard amount on materials produces a variance of:A standard cost is described as being developed in order to:Paying workers less per hour than the standard rate produces which variance?