Pierre Enterprises, a company that manufactures a product using scarce and costly materials, utilizes management by exception. Pierre's flexible budget indicated $2,000,000 of material costs, $3,000,000 of direct labor, and $5,000,000 of manufacturing overhead to support $20,000,000 of sales. Under this system, which one of the following variances would not be further investigated?
a. A $400,000 unfavorable production volume variance.
b. A $70,000 unfavorable material quantity variance.
c. A $370,000 favorable labor efficiency variance.
d. A $2,000,000 unfavorable sales quantity variance.
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THABET NASR
Accountant
Cairo
Egypt
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