# Question

The manager of a manufacturing firm received the following information related to the last period’s direct materials and direct labor variances:
Direct materials price variance . . . . . . . . . . . . . . . . . Favorable
Direct materials quantity variance . . . . . . . . . . . . . . Favorable
Direct labor rate variance . . . . . . . . . . . . . . . . . . Unfavorable
Direct labor efficiency variance . . . . . . . . . . . . . . . Favorable
a. Ignoring all other variances, what are possible reasons for a favorable direct materials price variance?
b. Given that the quality of direct materials purchased was exactly as expected, how would you explain the above combination of the four variances?

Sales0
Views82