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What would be effect of the decrease in raw material price

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Problem 1: During the month of July, SETCO experienced a sharp, unexpected decline in the cost of one of its direct materials. The firm significantly increase its level of production because it was able to lower its selling price and sell more products. If SETCO uses a standard cost system properly, what would be the effect of the decrease in raw material price and the increase in the level of production on SETCO's material variances?

Material Price Variance                 Material Quantity Variance

A. Favorable                                      Unaffected

B. Favorable                                       Favorable

C. Favorable                                        Unfavorable

D. Unfavorable                                        Unfavorable

Reference no: EM132632534

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