1, 3, 4 and 6
2, 3, 5 and 6
3, 4, 5 and 6
1, 3, 5 and 6
Answer is Right!
Answer is Wrong!
The correct answer is A. 1, 3, 4 and 6.
Material price variance is the difference between the actual price paid for materials and the standard price that should have been paid. It can be caused by a number of factors, including:
- Change in market price: The market price of materials can fluctuate due to a number of factors, such as changes in supply and demand, changes in the cost of production, and changes in the value of the currency.
- Use of poor quality of material: Using poor quality materials can lead to higher costs, as the materials may not be as durable or may require more processing.
- Inefficient buying: Inefficient buying practices can lead to higher costs, as the company may not be getting the best possible prices for the materials it purchases.
- Untimely buying: Untimely buying can lead to higher costs, as the company may have to pay more for materials that are in short supply.
- Paying overtime for urgent work: Paying overtime for urgent work can lead to higher costs, as overtime rates are typically higher than regular rates.
- Use of substitute material of different prices: Using substitute materials of different prices can lead to higher costs, as the substitute materials may not be as efficient or may require more processing.
Of the options listed, only options 1, 3, 4, and 6 can cause material price variance. Option 2, use of poor quality of material, can cause material cost variance, but not material price variance. Option 5, paying overtime for urgent work, can cause labor cost variance, but not material price variance.