The Production Manager of a Company Was Experiencing High Defect

Multiple Choice

The production manager of a company was experiencing high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to purchase a higher grade of material which would be more reliable, but he was worried that the cost of the new material might negatively impact operating income. This situation could have produced which of the following variances?

A) Unfavorable materials price variance
B) Favorable labor price variance
C) Favorable labor efficiency variance
D) Unfavorable materials efficiency variance