Which of the following statements is not true?
A A favorable labor efficiency variance could result from using higher-quality materials that result in fewer inspections.
B A favorable labor rate variance could result from lower-wage workers quitting.
C A favorable materials price variance could result from purchasing identical materials from another supplier at a lower price.
D An unfavorable materials usage variance could result from not efficiently utilizing raw materials, thus causing waste.
The correct answer and explanation is:
The statement that is not true is B: A favorable labor rate variance could result from lower-wage workers quitting.
A favorable labor rate variance occurs when the actual hourly wage rate paid is lower than the expected or standard rate. This could happen if a company is able to hire workers at a lower wage than initially planned. However, the scenario described in option B—lower-wage workers quitting—would most likely lead to a higher labor rate variance, not a favorable one. This is because if lower-wage workers leave, the company might need to hire more experienced or higher-paid workers to fill those positions, increasing the actual wage rate and resulting in an unfavorable labor rate variance.
To break down the other statements:
A: A favorable labor efficiency variance could result from using higher-quality materials that result in fewer inspections.
This statement is true because using higher-quality materials can reduce the time spent on inspections and rework, leading to better labor efficiency. When workers spend less time on correcting errors or conducting inspections, it improves efficiency and creates a favorable variance.
C: A favorable materials price variance could result from purchasing identical materials from another supplier at a lower price.
This statement is also true. If a company purchases materials at a lower price than originally planned, it results in a favorable materials price variance. Changing suppliers or negotiating better terms can lead to cost savings, which is beneficial to the company.
D: An unfavorable materials usage variance could result from not efficiently utilizing raw materials, thus causing waste.
This is true as well. An unfavorable materials usage variance indicates that more materials were used than expected, often due to inefficiency, waste, or poor planning. This results in higher material costs, impacting the company negatively.
So, B is the only incorrect statement.