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Hi John,
The finance director of Paint Mixers Ltd has produced the table below showing the variance results for the first three months of the year:
Materials price Variance
Jan – £3K adv
Feb – £2k adv
March – £1k advMaterial mix variance
Jan – £2k adv
Feb – £2k adv
March – £100 FavMaterial yield variance
Jan – £4k adv
Feb – £2k adv
March – £50 FavWhich of the following interpretations of the variance analysis exercise above is NOT correct?
A – The purchasing manager should be able to threaten to switch suppliers to a get a better deal and address the adverse mat price variance.
B – The materials mix variance is entirely under the control of the production manager.
C – The fav yield variance in March could be the result of operational efficiency.
D – The responsibility for the initial poor performance must be borne by both the the purchasing manager and the production manager.The correct answer is D, as apparently the production manager controls the mix and production process so must be the one to take sole responsibility. However, I do not understand why the purchasing manager doesn’t bear any responsibility for the 3 adverse price variances. Is he/she not responsible for spending too much on the required materials?
Many thanks in advance.
I do not have the Kaplan Kit (only the BPP Kit), but I do not think that this is a past exam question.
Unless there is more information given in the question than you have typed (especially if this is a Section B type question and there is more information in the stem at the beginning), you are correct and the purchasing manager should also bear some responsibility.
Many thanks John. I was scratching my head for a while with this one. It’s actually a section A OTQ in Kaplan’s kit so no further info is given.
I will assume it’s a typo/mistake on their end.
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