Misc Ltd Entered into a New Contract with One of Its

question 152

Multiple Choice

Misc Ltd entered into a new contract with one of its raw material suppliers. The new contract required the supplier to deliver raw materials with a 24-hour notice from Misc. This reduces Misc's material handling costs, but has increased the cost of the raw materials delivered. Which of the following variances is most likely to result?

• A) Unfavourable direct labour efficiency variance
• B) Favourable direct material price variance
• C) Unfavourable variable overhead spending variance
• D) Unfavourable direct material price variance

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