What does a favourable direct materials efficiency variance indicate?

Question

Quizplus · Accepted Answer

A favourable direct materials efficiency variance indicates that the actual quantity of direct materials used was less than the standard quantity for actual output, which means that the company used its materials more efficiently than expected. Option A is incorrect because the variance measures the difference in cost of actual and standard quantity, not the actual cost alone. Option C is incorrect because it assumes that there was an overuse of direct materials, which is the opposite of a favourable variance. Option D is incorrect because it assumes that more materials were used than planned, which indicates an unfavourable variance.

What Does a Favourable Direct Materials Efficiency Variance Indicate