Which of the following is the source of variance that will help management (when understood in terms of the relationship among the many interacting components in a plan) are these?

Question

Options

• Achanges in resource prices not anticipated in the plan
• Bproduct mixes different than planned
• Cmaterial differences for plan vs. actual resource productivity
• DAll of the above

• A
  9% (4)
• B
  2% (1)
• C
  4% (2)
• D
  84% (38)

Explanation

All three options - price variances, mix variances, and productivity variances - are recognized sources of variance in management accounting, and each reveals a different dimension of how actual performance diverges from plan. Option A (unanticipated resource price changes) is a price variance, reflecting market or procurement conditions outside the plan's assumptions. Option B (product mix differences) is a mix variance, capturing how shifts in the relative proportions of products sold or produced affect overall profitability in ways that unit-level analysis alone would miss. Option C (resource productivity differences) is an efficiency/usage variance, showing whether inputs were consumed more or less effectively than planned.

Choosing only A, B, or C individually is incomplete - the question specifically emphasizes understanding variance through the relationships among interacting components, and all three types interact: a shift in product mix (B) can affect resource usage (C), and price swings (A) compound both. D is correct because comprehensive variance analysis requires all three lenses simultaneously.

Memory tip: Think P-M-E - Price, Mix, Efficiency. Any time a question asks about the full picture of why actuals deviate from plan, "all of the above" is a strong candidate when each individual option describes a distinct, valid variance type.

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