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Keever Corporation

The Keever Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier, resulting in a direct-material price variance of $9,800(F). The alloy produced more waste than normal, as evidenced by a direct-material quantity variance of $3,000(U), and was also difficult to use. This slowed worker efficiency, generating a $2,500(U) labor efficiency variance. To help remedy the situation, the production manager used senior line employees, which gave rise to a $900(U) labor rate variance. If overall product quality did not suffer, what variance amount is best used in judging the appropriateness of the purchasing manager's decision to acquire substandard material?

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The Keever Corporation's purchasing manager obtained a special price on an aluminum alloy from a new supplier, resulting in a direct-material price variance of $9,800(F). The alloy produced more waste than normal, as evidenced by a direct-material quantity variance ...

Solution Summary

This solution is comprised of a detailed explanation to answer what variance amount is best used in judging the appropriateness of the purchasing manager's decision to acquire substandard material.

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