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Which TWO of the following factors should be considered before investigating an adverse material usage variance?
Worldwide increase in cost of raw material
Interrelationship with adverse labour rate variance
Cost involved in the investigation
Answer are 2 and 4.
My question is that if favorable labor efficiency variance would have been in answer so would it have been correct? As labor might have worked more quickly due to which they have wasted material.
Although a favourable labour efficiency variance could have resulted in them wasting more material, it would really be the material usage variance (which would be adverse) that they would spend time investigating.