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Question

An unfavourable material usage arises because of ___________.

A
Price increase in raw materials
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B
Price decrease in raw materials
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C
Less than anticipated normal wastage in the manufacturing process
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D
More than anticipated normal wastage in the manufacturing process
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Solution

The correct option is B More than anticipated normal wastage in the manufacturing process
Material usage variance is calculated by having a difference between Standard quantity of material minus the actual quantity of material. If excess quantity is used to produce a unit than the standard quantity, it is an unfavorable material usage variance. This might be due to more than the anticipated normal wastage.

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