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?



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  • CreatedApril 17, 2014
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