Harley Corporation manufactures tables and desks for academic use in classrooms; the base product is made from plywood with a laminate top. The production manager was informed that an unfavorable materials efficiency variance and an unfavorable labor efficiency variance occurred within the same month. Which of these is a likely explanation for this occurrence?
a. The quality of materials purchased was above standard and allowed the production workers to incur less waste, beating the standard.
b. The price of materials purchased was above standard and adversely affected the material usage variance as well.
c. The most experienced production workers were placed on the job upon noting that high quality materials were received from the vendor.
Selected: d. The quality of materials purchased was below standard, and workers incurred more waste as well as labor to meet production goals for quality output. This answer is correct.
Correct! When unfavorable materials efficiency occurs, this is an indication that the amount of materials used exceeds standard; in addition, an unfavorable labor efficiency variance is an indication that labor hours incurred exceed standard as well.