alleryStart learning →Buying cheaper but poorer material that workers waste illustrates that variances can be:
AAlways independent
BImpossible to compute
CIdentical in size
DLinked to each other
Answer & Solution
Correct answer: D. Linked to each other
1. One decision can move several variances at once.
2. A variance is a difference between the standard and the actual performance.
3. A favorable material price variance could cause an unfavorable labor efficiency variance.
4. It could also cause an unfavorable material quantity variance.
5. So a single purchasing choice moves several variances together.
_Source: OpenStax Principles of Accounting, Volume 2: Managerial Accounting (CC BY-NC-SA 4.0), Ch 8 'Standard Costs and Variances'_
Keep practising Standard Costs and Variances
Browse all Standard Costs and Variances questions for US CMA Part 1, or explore more Accounting topics.
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?