Standard costing and variance analysis
. Below is a list of possible factors causing changes in expenses. Which of these possible factors will explain the direct material price and usage variances? Once you have identified the factors explaining the direct material price and usage variances, state whether each factor is most likely to explain either the direct material price variance or the direct material usage variance or whether a factor could explain both variances.
- Workers have been careless with materials handling.
- The purchasing manager has tried to save money by buying in material at a lower price than standard.
- Employees have been paid more per hour than the standard says they should have been.
- Fixed overheads were lower than expected.
- Cheaper material has led to greater wastage.
- Material purchased in bulk has reduced the unit cost of materials to the business.
- Employee productivity bonuses have been paid.
- Material cost prices have changed since the standard was last revised.
- Lower quality material has been purchased.
- The price of variable overheads has increased.
- Workers are not working as quickly as the standard says they should.
When you have considered how you would answer the question select Yes to view the correct answer.