Question

The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result?

(A) Favorable materials quantity variance
(B) Favorable total materials variance
(C) Unfavorable materials price variance
(D) Unfavorable labor quantity variance

Answer 1

(D) Unfavorable labor quantity variance

Step-by-step explanation:

Since in the question, the lower quality material is ordered so that less price can be given which required more hours to process the material as compared to the standard which results in unfavorable labor quantity variance

The formula to compute the labor quantity variance is shown below:

= Standard Rate × (Actual hours - Standard hours)

If the standard hours are more than actual hours than it leads to unfavorable instead of favorable