ECONOMICS

Detailed explanation-1: -Highly trained workers could have a favorable effect on the material quantity variance. The standard quantity or standard hours allowed refers to the amount of the input that should have been used to produce the actual output of the period.

Detailed explanation-2: -A materials quantity variance compares the actual and expected direct material used in manufacturing a product. You have an unfavorable materials quantity variance when you use more material than expected. It’s favorable when you use less material than planned.

Detailed explanation-3: -A favorable variance occurs when the cost to produce something is less than the budgeted cost. It means a business is making more profit than originally anticipated. Favorable variances could be the result of increased efficiencies in manufacturing, cheaper material costs, or increased sales.

Detailed explanation-4: -Answer and Explanation: The correct answer is c. Labor rate variance = No; Materials quantity variance = Yes. Poorly trained workers are the reason for the unfavorable material quantity variance as unskilled workers will not handle the available quantity of products properly.

Detailed explanation-5: -The favorable materials price variance could be caused by an unexpected increase in costs, an unexpected decrease in costs, or a controllable inefficiency.