The production manager of a company was experiencing a high defect rate on the a

Question

The production manager of a company was experiencing a high defect rate on the assembly line, which was slowing production and causing wastage of valuable direct materials. The production purchased a higher grade of materials that would be more reliable , but was worried that the cost of the new materials might negatively affect operating income. This would produce a _______

A. Unfavorable direct materials cost variance

B. Favorable direct labor cost variance

C. Unfavorable direct materials efficiency variance

D. Favorable direct labor efficiency variance

Explanation / Answer

Answer is both the variances

A. Unfavorable direct materials cost variance - High price

C. Unfavorable direct materials efficiency variance - wastage of material

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