The Production Manager of a Company Was Experiencing High Defect

question 27

Multiple Choice

The production manager of a company was experiencing high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided recruit some highly skilled production workers from another company to bring down the defect rate, but he was worried that the higher wages of these workers might negatively impact operating income. This situation could have produced which of the following variances?

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

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Definitions:

Price Of X

Refers to the monetary value or cost required to purchase a specific good or service denoted as "X".

Price Of Y

The cost at which a particular good, referred to as "Y" in economic models, is sold or purchased in the market.

Commodity 1

an economic term referring to a raw material or primary agricultural product that can be bought and sold, denoted here as the first in a series or category.

Commodity 2

Another generic term for any good or service, used distinctively from "Commodity X" in economic analysis.