The Procurement Manager Was Able to Bring Down the Cost

question 51

Multiple Choice

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 would have led to a(n) :

• A)favorable direct materials cost variance.
• B)unfavorable direct labor cost variance.
• C)unfavorable direct labor efficiency variance.
• D)favorable direct materials efficiency variance.

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