The Procurement Manager Was Able to Bring Down the Cost

question 94

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 could have produced which of the following variances?

• A) Unfavorable materials price variance
• B) Favorable labor price variance
• C) Unfavorable labor efficiency variance
• D) Unfavorable materials efficiency variance

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Definitions:

Collaborative Team

A group of individuals who work together effectively by sharing knowledge, tools, and efforts to achieve a common goal.

Communication Issues

Communication issues refer to problems that arise in the transmission or reception of a message, leading to misunderstandings, conflict, or inefficiency.

Control Issues

A term often used to describe a situation or personal disposition where one feels the need to excessively manage or dictate the actions of others or the outcomes of situations.

Trimmer Organization

A business strategy aiming at streamlining organizational structures and processes, reducing redundancy, and enhancing efficiency.