Justin Company Recently Purchased Materials from a New Supplier at a Very

question 66

Multiple Choice

Justin Company recently purchased materials from a new supplier at a very attractive price. The materials were found to be of poor quality, and the company's laborers struggled significantly as they shaped the materials into finished product. In a desperation move to make up for some of the time lost, the manufacturing supervisor brought in more-senior employees from another part of the plant. Which of the following variances would have a high probability of arising from this situation?

• A) Material price variance, favorable.
• B) Material quantity variance, unfavorable.
• C) Labor rate variance, unfavorable.
• D) Labor efficiency variance, unfavorable.
• E) All of the other answers are correct.

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Definitions:

Agricultural Adjustment Administration

A New Deal agency established in 1933 to improve agricultural prices by controlling production, often through paying farmers not to plant on part of their land.

Sharecroppers

Farmers who rent small plots of land to farm and in return, they give a portion of their crop yield to the landlord as rent.

Landlords

Individuals or entities that rent land, buildings, or housing to tenants for a specified period under a lease agreement.

Black Cabinet

A term for the group of African American advisers to President Franklin D. Roosevelt during his presidency.