Byron Products has a favourable materials price variance.Which of the following would be the least likely reason for this variance?
A) The company overbudgeted the standard price for materials.
B) The company took advantage of purchase discounts from their suppliers.
C) The company's employees were more efficient with the use of their production time.
D) The company purchased a substandard material at a cheaper price.

Question

Quizplus · Accepted Answer

A favourable materials price variance indicates that the actual cost of materials is less than the expected cost. This variance is directly related to the price paid for materials, not the efficiency of employee production time, which would more likely affect a quantity or efficiency variance. Choices A, B, and D all directly relate to the cost of materials.

Byron Products Has a Favourable Materials Price Variance