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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'_
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