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Franklin Inc. reported the following variances: Direct materials price variance $ 0 Favorable Direct materials quantity variance $2,000 Unfavorable Direct labor rate variance $6,000 Favorable

Franklin Inc. reported the following variances:

  • Direct materials price variance $ 0 Favorable
  • Direct materials quantity variance $2,000 Unfavorable
  • Direct labor rate variance $6,000 Favorable
  • Direct labor efficiency variance $7,000 Unfavorable

Which of the following explanations is the most likely cause?

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The sales manager decreased the selling price of the product, causing an increase in demand, a need to purchase raw material from new vendors, and the need for workers to work overtime.

Human Resources hired lower quality labor at a cheaper price causing more defective products and slower production.

The purchasing manager did not order enough raw materials, causing labor to be idle for much of the work week.

The production manager inefficiently scheduled maintenance, causing laborers to sit idle and then need to work overtime in order to meet demand.

The economy slowed, causing a decrease in demand, lower sales, and an increase in inventory.

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