Question

1. What is the result when the quantity of materials used is less than the standard quantity?

Multiple Choice

• An unfavorable materials price variance

• A favorable materials usage variance

• An unfavorable materials usage variance

• A favorable materials price variance

2. Which manager is usually held responsible for materials usage variances?

Multiple Choice

• Purchasing agent

• None of these answers is correct.

• Production supervisor

• Marketing manager

3. Flexible budget amounts for variable costs and revenues come from multiplying standard per unit amounts by the planned volume of production.

True

False

Answer 1

1. A favorable materials usage variance.

Explanation: When the standard quantity is more and the actual consumption is less per unit of quantity produced, it means that the production has been more efficient than what was budgeted for and hence, there is favorable material usage variance.

2. Production supervisor.

Explanation: The quantity usage takes place while the production is under process and hence, Production manager is usually held responsible for material usage variance. Further, Purchasing agent is generally held responsible for material price variance since his responsibility is procurement of materials and Marketing Manager is responsible for sales volume variance since his responsibility is sales of goods produced.

3. False.

Explanation: Flexible budget amount comes from multiplying the standard per unit by the atual level of production. This would give the flexible budget for different level of production.