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Mock Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Mock Question

  • This topic has 1 reply, 2 voices, and was last updated 5 months ago by John Moffat.
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  • January 23, 2022 at 12:45 pm #647321
    maximus07
    • Topics: 374
    • Replies: 379
    • ☆☆☆☆

    Which TWO of the following factors should be considered before investigating an adverse material usage variance?

    Worldwide increase in cost of raw material
    Tolerance limits
    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.

    January 23, 2022 at 3:47 pm #647330
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49601
    • ☆☆☆☆☆

    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.

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