Question

Starfish Enterprises management has obtained data on the material costs for a selected job which used 300 feet of materials, while estimates for the job required only 260 feet of materials. The materials price per unit was the same. Which is not a reason for the difference in material usage? A new employee worked on the job. The material used was of poor quality. The cutting tools were in need of repair. The cost of materials increased from the time of the estimate.

Answer 1

Answer:

Starfish Enterprises

The reason that is not the cause of the difference in material usage is:

The cost of materials increased from the time of the estimate.

Explanation:

a) Data and Calculations:

Units of materials used for the job = 300 feet

Standard units of materials for similar job = 260 feet

Unit variance = 40 Unfavorable (300 - 260)

b) Material usage variance does not concern with the cost of materials.  Since it is stated that the materials price per unit remained the same in both instances, the cost of materials increasing is certainly not a factor for the material usage variance.  The variance is caused by the other factors.