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Material usage variance (adverse)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Material usage variance (adverse)

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by AvatarJohn Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • February 20, 2018 at 7:58 pm #438151
    Avatarhumai
    Participant
    • Topics: 757
    • Replies: 248
    • ☆☆☆☆☆

    The following are potential causes of material usage variance, select the ones which could properly explain an adverse usage variance and at the same time indicate poor performance of the production manager.

    The business has separate manager for production, material purchase and machine maintenance .

    1) Selection of new supplier offering similar quality for lower prices
    2) Inadequate training of newly recruited staff in the production department.
    3) Movements in the exchange rates causing more expensive materials
    4) Machine breakdown due to delays in the annual maintenance schedule
    5) Reduced quality materials bought
    6) Change in the production process causing extra losses of materials

    Sir correct answer are inadequate training of newly recruited staff in the production department and change in the production process causing extra losses of materials. But sir in my opinion, reduced quality material and machine breakdown due to delays in the annual maintenance schedule should also be the correct answer, but the suggested answer in kit does not include this, can you please explain me the reason?

    February 21, 2018 at 10:30 am #438206
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54839
    • ☆☆☆☆☆

    Buying reduced quality material could certainly lead to an adverse usage variance, but it would be the responsibility of the purchase manager, not the production manager.

    Similarly delays in maintenance would be the responsibility of the machine maintenance manager – not the production manager.

    The question asks for those that would also indicate poor performance by the production manager.

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  • The topic ‘Material usage variance (adverse)’ is closed to new replies.

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