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?

1)Favorable materials quantity variance
2)Favorable total materials variance
3)Unfavorable materials price variance
4)Unfavorable labor quantity variance

Answer 1

The purchasing agent's decision to order lower quality materials will most likely result in an unfavorable materials price variance. Correct option is 3.

Step-by-step explanation:

The purchasing agent of Poplin, Inc. ordered materials of lower quality in an effort to reduce costs. In this case, the most likely variance that will result is an unfavorable materials price variance.

The materials price variance measures the difference between the actual cost of materials purchased and the standard cost of materials. When lower quality materials are purchased at a lower price, the actual cost of materials will be lower than the standard cost. This leads to an unfavorable variance because the lower quality materials may impact product quality or require additional resources to manage.

Therefore, the correct answer is option 3: Unfavorable materials price variance.