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The Industrial Revolution

An unfavourab...

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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