Situation 1: Loren Company Recently Purchased Materials from a New

Multiple Choice

Situation 1: Loren Company recently purchased materials from a new supplier at a very attractive price.The materials were found to be of poor quality, and the company's laborers struggled significantly as they shaped the materials into finished product. Situation 2: In a desperate move to make up for some of the time lost, the Loren Company manufacturing supervisor brought in more-senior employees from another part of the plant. Which of the following variances would have a high probability of arising from both of these situations?

A) Situation 1: Material quantity variance, unfavorable; Situation 2: Material price variance, favorable.
B) Situation 1: Material quantity variance, favorable; Situation 2: Material price variance, unfavorable.
C) Situation 1: Material quantity variance, favorable; Situation 2: Labor rate variance favorable.
D) Situation 1: Labor rate variance, favorable; Situation 2: Labor efficiency variance, unfavorable.
E) Situation 1: Labor efficiency variance, favorable; Situation 2: Labor rate variance, favorable.