Chapter 9 Standard costing, flexible budgeting and variance analysis

Management Accounting for Non Specialists 2nd Edition© Catherine Gowthorpe 2005Cengage2. We obtained a really good quantity discount on materialsfrom a new supplier.3. The materials quantity variance is due to the fact that thematerials we’ve bought in recently have been of higherquality than we originally anticipated.4. The labour efficiency variance probably arises because thenew production line staff we took on in April are really veryefficient workers.5. The overhead variances are unfortunate, but the problemreally is that we underestimated the level of both fixed andvariable overheads when we were setting the original budget.Three of these explanations are quite plausible; two are not.Required: identify which explanations for the variances that haveoccurred in April 20X3 are plausible and which are implausible.4