Answer the Following Questions Using the Information Below:
Shepparton Water

question 58

Multiple Choice

Answer the following questions using the information below:
Shepparton Water Sports has prepared the following flexible budget for September and is in the process of interpreting the variances.F denotes a favourable variance and U denotes an unfavourable variance.
$$\begin{array} { l r r r } & \text { Flexible } & { \text { Variances } } \\& \underline { \text { Budget } } & \text { Price } & \text { Efficlency } \\\text { Material A } & \$ 20000 & \$ 1000 \mathrm {~F} & \$ 3000 \mathrm { U } \\\text { Material B } & 30000 & 500 \mathrm { U } & 1500 \mathrm {~F} \\\text { Direct mantufacturing labour } & 40000 & 500 \mathrm { U } & 2500 \mathrm {~F}\end{array}$$
-The MOST likely explanation of the above variances for Material A is that:

• A)the company used a higher-priced supplier.
• B)higher-quality raw materials were used than were planned.
• C)Material A used during September was $2000 less than expected.
• D)a lower price than expected was paid for Material A.

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