ACCA · Question 25 · Budgeting and control
Section B - Case 2: AeroLogix
AeroLogix provides drone-based medical delivery. The production manager is reviewing the monthly variance report. There is a significant Adverse Labor Efficiency Variance and a significant Favorable Material Price Variance.
Which TWO of the following scenarios could logically explain this combination of variances?
Answer options:
The purchasing department bought cheaper, lower-quality materials that were harder for the workers to assemble.
Highly skilled workers were hired at a premium rate, and they completed the work faster than standard.
A new supplier offered a bulk discount on materials, but the materials required extra manual sorting before use.
New, faster machinery was installed, reducing assembly time, while material prices remained stable.
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