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In order to indicate to managers the trend and materiality of variances, a business firm expresses them as percentages as in the following examples where
In order to indicate to managers the trend and materiality of variances, a business firm expresses them as percentages as in the following examples where (A) indicates an adverse variance and (F) indicates a favorable variance. July August September Material price variance as a % of standard cost of material used 1% (A) 2% (F) 7% (F) Material usage variance as a % of standard total production cost3% (F) 4% (A) 6% (A) The following statements relate to recent operational events. 1) In September the buyer located a new supplier who charged a lower price than the previous supplier. The material was found to be a low quality, however, leading to a high level of waste. 2) The general trend is that all direct material variances are becoming more significant and are likely to be worthy of management attention 3) A change in the bonus payment scheme has improved the productivity of employees, who are now converting raw materials into finished products more effectively. Which of the statements is or are consistent with the results shown
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