A significant and favorable material price variance may be linked with a significant and unfavorable material usage variance.

Question

Quizplus · Accepted Answer

A favorable material price variance occurs when the actual cost of materials is less than the expected cost. However, if lower-quality materials are purchased to achieve this cost saving, it might lead to an unfavorable material usage variance because more material may be needed to produce the same amount of product, or there might be more waste.

A Significant and Favorable Material Price Variance May Be Linked