ACCA MA · Chapter 12 · Question 9 of 10
A company reports a favourable material price variance and an adverse material usage variance. Which of the following is the most likely single explanation for both?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Cheaper, lower-quality material was bought, which led to more waste in production
Explanation
Lower-quality material usually costs less (a favourable price variance) but tends to cause more waste and rejects (an adverse usage variance). This interdependence shows why variances should be investigated together rather than in isolation.
More Standard costing and cost variances MCQs
- Q1Which type of standard allows for normal levels of material waste, machine breakdowns and idle time?
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