1 What are some possible causes for an unfavorable Direct Materials quantity variance? Before answering, be sure that you've reviewed exactly how this variance is calculated and what it's trying to measure. It may help to define how the variance is calculated in your answer as a lead into the causes of why this variance may be unfavorable. Think carefully here and review the course resources. An incorrect response will not receive points.

2. In its most recent budget performance analysis, ABC Company calculated a favorable direct labor price variance during the same period that an unfavorable direct labor quantity variance was recorded. Is it possible that the two variances are related? Do not assume any changes in product demand or supply. Also, you can assume that the company has control over what labor it hires and at what cost (to a point). HINT: Again, think very carefully before responding as there is a correct answer here that's actually quite simple overall. Be sure that you clearly understand what and how to calculate both of these variances before you attempt your answer. What are they trying to measure? Think about what kind of consequences could occur if the company made a conscious decision to hire laborers at a lower hourly wage rate? What kind of workers would they attract and what may result?