Question
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?
Group of answer choices
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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started