Day: April 9, 2023

A company has a favourable direct material price variance, an adverse direct material usage variance and an adverse direct labour efficiency variance.

There is a direct relationship between all of the variances.

What is the most likely reason for this relationship?

Select ONE answer:

1. Direct labour is of a higher quality than standard.
2. Direct labour is of a lower quality than standard.
3. The material is of a higher quality than standard.
4. The material is of a lower quality than standard.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

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