The production manager of a company was experiencing high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to purchase a higher grade of material which would be more reliable, but he was worried that the cost of the new material might negatively impact operating income. This situation could have produced which of the following variances?

Question

Quizplus · Accepted Answer

The situation described is related to a possible improvement in the efficiency of materials, which would result in less wastage and therefore decreased production costs. This would lead to a favorable materials efficiency variance. The other options are not relevant to the given scenario.

The Production Manager of a Company Was Experiencing High Defect