Justin Company Recently Purchased Materials from a New Supplier at a Very

question 4

Multiple Choice

Justin Company recently purchased materials from a new supplier at a very attractive price.The materials were found to be of poor quality,and the company's laborers struggled significantly as they shaped the materials into finished product.In a desperation move to make up for some of the time lost,the manufacturing supervisor brought in more-senior employees from another part of the plant.Which of the following variances would have a high probability of arising from this situation?

• A)Material price variance,favorable.
• B)Material quantity variance,unfavorable.
• C)Labor rate variance,unfavorable.
• D)Labor efficiency variance,unfavorable.
• E)All of thesE.

---

Definitions:

Materials Quantity Variance

The difference between the actual amount of materials used in production and the standard amount expected, multiplied by the standard cost per unit.

Materials Price Variance

The difference between the actual cost of materials purchased and the standard cost, multiplied by the quantity of materials purchased.

Raw Materials Price Variance

The difference between the actual cost of raw materials and the expected (or standard) cost.

Raw Materials Quantity Variance

It measures the difference between the expected amount of raw materials needed for production and the actual amount used.