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    Interpret offsetting material variances: price vs. usage

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    Consider a situation where the materials price variance is favorable and the materials quantity variance is unfavorable. How would you explain that situation?

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    Interpret a favorable price variance:

    If your materials price variance is favorable, that means you purchased it at below the standard price. You got a deal, or a discount or perhaps bought from a new vendor or tried a lower grade of materials and so spent less per pound/foot/part acquiring the materials.

    Interpret an unfavorable quantity variance:

    If your quantity variance is ...

    Solution Summary

    Your discussion is 254 words and interprets the two variances first and then explains how they may or may not be related and why.