Some variances of actual performance from budgeted performance should be ignored

Question

Some variances of actual performance from budgeted performance should be ignored. Which of the following variance causes do not require any corrective action? a) The market price of a component part has increased for an indefinite period. b) The standard was based on an incorrect estimate and caused a variance when production processes were in conformance with expected efficiency levels c) A supervisor temporarily used the wrong materials for the job at hand. d) A flu epidemic caused high absenteeism and unfavorable labor efficiency variances.

Explanation / Answer

Ans: Option A

Reason: As it has been done due to external factors which are beyond the control of the entity so no corrective actions could be done at the entity end

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