A company has set a new policy of acquiring materials from a second hand auction because it is cheaper than market price. Upon further investigations you have discovered that the materials from the auction are lower than the normal standard.

How is the new policy likely to impact on the following variances:

Material Price: Answer 1Choose...

a)Favourable

b)Adverse

b)N/A

Labour Rate:Answer 1Choose...

a)Favourable

b)Adverse

b)N/A

Fixed overhead expenditure: Answer 1Choose...

a)Favourable

b)Adverse

b)N/A

Sale Price variance: Answer 1Choose...

a)Favourable

b)Adverse

b)N/A