Aunt Emily's Food Products is famous for its frosted fruit cake.The main ingredient of the cake is dried fruit,which Aunt Emily's purchases by the pound.In addition,the production requires a certain amount of direct labor.Aunt Emily's uses a standard cost system,and at the end of the first quarter,there was a favorable direct materials cost variance.Which of the following is a logical explanation for that variance?
A) The production manager negotiated a lower wage package for production staff, bringing direct labor costs down.
B) The factory lost two experienced workers at the beginning of the quarter, and their replacements worked at a much slower pace during their training period.
C) The purchasing manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard.
D) The production staff changed the work flow process so that there was less wastage of direct materials during production.

Question

Quizplus · Accepted Answer

The favorable direct materials cost variance could be a result of the purchasing manager being able to secure a volume discount on dried fruit, which would bring down the direct materials cost below the standard cost.

Aunt Emily's Food Products Is Famous for Its Frosted Fruit