A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing wastage of valuable direct materials.The production manager decided to purchase a higher grade of materials that would be more reliable,but he was worried that the cost of the new materials might negatively affect operating income.This would produce a(n)________.
A) favorable direct materials cost variance
B) unfavorable direct labor cost variance
C) unfavorable direct labor efficiency variance
D) favorable direct materials efficiency variance

Question

Quizplus · Accepted Answer

The production manager's decision to purchase a higher grade of materials that would be more reliable suggests that he is attempting to increase the efficiency and reduce the waste of direct materials, which would result in a favorable direct materials efficiency variance.

A Company's Production Department Was Experiencing a High Defect Rate