Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.

The most likely explanation of the above variances for Material A is that ________.
A) a lower price than expected was paid for Material A
B) higher-quality raw materials were used than were planned
C) the company used a higher-priced supplier
D) Material A used during September was $2,000 less than expected

Question

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.

The most likely explanation of the above variances for Material A is that ________.

The most likely explanation of the above variances for Material A is that ________.
A) a lower price than expected was paid for Material A 
B) higher-quality raw materials were used than were planned 
C) the company used a higher-priced supplier 
D) Material A used during September was $2,000 less than expected

Quizplus · Accepted Answer

The flexible budget variance for Material A is F$2,000, indicating that the actual cost of Material A was $2,000 less than expected. This could be due to a lower price than expected being paid for the material.

Handley Manufacturing Company Has Prepared the Following Flexible Budget for August