Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances

Management Mar 19, 2021

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.

Flexible Budget

Variances

Price

Efficiency

Material A

$43,000

$1,000F

$3,000U

Material B

68,000

700U

1,700F

Direct manufacturing labor

86,000

200U

2,100F

The most likely explanation of the above variances for Material A is that? ______

Expert Solution

Materials Price Variance was favorable. So, The correct statement is that "a lower price than expected was paid for material A" because standard price is more and actual price for material is less so difference is positive .

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