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The Procurement Manager Was Able to Bring Down the Cost

question 118

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The procurement manager was able to bring down the cost of direct materials by purchasing materials of a slightly lower grade quality than the company had used previously. The lower grade of materials, however, meant a higher defect rate on the assembly line, and higher wastage of materials during production, which in turn lowered operating income. This situation could have produced which of the following variances?


Definitions:

Optimal Experiences

Moments or activities in which an individual feels a high level of satisfaction, enjoyment, and fulfillment, often associated with the concept of "flow."

Enjoyable

Providing pleasure or delight; pleasant.

Creativity

The ability to generate innovative ideas, solutions, or works that are original and valuable.

Goal

An aim or desired result that an individual or organization endeavors to achieve through effort and planning.

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