Lukey Products has an unfavorable materials usage variance. Which of the following would be the most likely reason for this variance?
A) The company under budgeted 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 unfavorable materials usage variance occurs when the actual amount of materials used is more than the budgeted or standard amount. This could be due to factors such as inefficiencies in the production process, waste, or using more materials than expected for each unit. Option A suggests that the company may have under budgeted the quantity of material to be used, which is a common reason for an unfavorable materials usage variance.

Lukey Products Has an Unfavorable Materials Usage Variance