Question

Question 23) Grand Canyon Food Products is famous for its frosted fruit cake. The main ingredient of the cake is dried fruit which Grand Canyon purchases by the pound. In addition, the production requires a certain amount of direct labor. Grand Canyon uses a standard cost system, and at the end of the first quarter, there was an unfavorable direct materials efficiency variance. Which of the following is a logical explanation for that variance?

A) The production manager negotiated a lower wage package for production staff, bringing direct labor costs down

B)The factory lost two experienced workers at the beginning of the quarter, and their replacements wasted a large amount of dried fruits during their training period

C) The purchasing amount set by ager was able to secure a volume discount on dried frust, purchasing the fruit for less than the amount set by standard

d)The production staff changed the work flow process so that production required fewer direct labor hours

Answer 1

B.The factory lost two experienced workers at the beginning of the quarter, and their replacements wasted a large amount of dried fruits during their training period.

Direct material efficiency variance will calculate whether the direct materials were used efficiently or not.

Since the factory lost two experience workers and the trainees used more raw materials per unit of finished product, this would be main reason for unfavorable direct material efficiency variance.

Option A, C, D would have resulted in favorable direct material efficienty variance.