Lukey Products has an unfavourable materials usage variance.Which of the following would be the most likely reason for this variance?
A) The company underbudgeted the quantity of material to be used for each unit.
B) The company purchased material at a price for less than what was expected.
C) The company budgeted for a lower sales volume than what actually occurred.
D) The company did not use up all the material that had been purchased.

Question

Quizplus · Accepted Answer

An unfavourable materials usage variance indicates that more material was used than what was budgeted for. This could be due to underbudgeting the quantity of material to be used for each unit, which means that the actual usage was higher than what was budgeted for.

Lukey Products Has an Unfavourable Materials Usage Variance