Qwax Limited had a poor March quarter after producing and selling only 95% of the budgeted number of units. A reconciliation of actual and budgeted profit for Qwax Limited shows an adverse sales price variance and a favourable direct material usage variance. What circumstances might have caused these variances?

Qwax Limited had a poor March quarter after producing and selling only 95% of the budgeted number of units. A reconciliation of actual and budgeted profit for Qwax Limited shows an adverse sales price variance and a favourable direct material usage variance. What circumstances might have caused these variances?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In the last quarter Company X has sourced a higher grade of material for its main product the Gyro. The material is more expensive than the previous material used but it has been found that significantly less of the new material is needed for each unit of the Gyro produced than the previous material. Which variances would you expect to see in the operating statement of company X for the last quarter? A.An adverse material price variance A favourable material usage variance B.A favourable material price variance An adverse material usage variance C.An adverse material price variance An adverse material usage variance D.A favourable material price variance A favourable material usage variance
The calculation of direct materials variances shows an adverse direct materials price variance of £5,000 and a favourable direct materials usage variance of £5,500. Which ONE of the following is the best interpretation of this result? OA. The price paid for the material was equal to the budget but the wastage was reduced because of a new training course for staff OB. A higher grade of employee was employed compared with the grade used for the budget, and consequently there was less wastage OC. A machine was faulty, causing damage to the material which resulted in greater wastage O D. The purchasing department bought higher-priced material of better quality, which led to reduced wastage
Using the Financial perspective under Balance scorecard, compute for the Growth component variance. Indicate whether the variance is favorable or unfavorable
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None
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ty Variance OF Master Budget (19,200 units) 57,600
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