15.3 Direct Materials Variances

Question 1

A favorable materials price variance coupled with an unfavorable materials usage variance most likely results from

A. Machine efficiency problems
B. Product mix production changes
C. The purchases and use of higher-than-standard quality materials.
D. The purchases of lower than standard quality materials.

Answer 1

D. The purchases of lower than standard quality materials.

A favorable materials price variance is the result of paying less than the standard price for materials. An unfavorable materials usage variance is the result of using an excessive quantity of materials. If a purchasing manager were to buy standard materials achieve a favorable price variance, an unfavorable quantity variance could result from using an excessive amount of poor quality materials.