An unfavorable factory overhead controllable variance may be due to which of the following factors? a. unexpected increases in the cost of utilities b. failure to maintain an even flow of work c. machine breakdowns d. failure to obtain enough sales

An unfavorable factory overhead controllable variance may be due to which of the following factors? a. unexpected increases in the cost of utilities b. failure to maintain an even flow of work c. machine breakdowns d. failure to obtain enough sales

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An unfavorable factory overhead controllable variance may be due to which of the following factors? a. unexpected increases in the cost of utilities b. failure to maintain an even flow of work c. machine breakdowns d. failure to obtain enough sales
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If a purchasing manager is able to buy direct materials required in the manufacturing of a product at a lower than ‘standard’ cost why may this result in an overall unfavorable total variance for DM’s.
Which of the following would not be considered a cost ofquality?a. Lost sales due to bad publicity generated by productfailures.b. The cost of repairing merchandise that was dropped bya forklift in the factory.c. The amount of a bonus paid to the work team producingthe fewest defective units.d. The cost of the external audit.
QUESTION 6 Which of the following may be the likely reason for a favorable direct labor rate variance? O overestimated standard labor cost, O changes to the product specification which reduced manufacturing time. O reduction in direct labor costs due to a strike in the factory. O overestimated standard labor time per unit.
Which of the following statements is false? Cost allocations such as activity-based costing allow manager to evaluate profitability of their products. A budget is a quantitative plan for acquiring and using financial and other resources over a specific forthcoming time period. A detailed activity-based costing system is costly to implement. Using different allocation base does not affect manufacturing overhead costs allocated to each product.
< Mastery Problem: Manufacturing Cost Variance (Actual Costs Compared to Standard Costs) Manufacturing cost variances may come from material costs that are higher or lower than expected, material usage that is not what was expected, higher or lower labor costs than expected, or more or less time spent to produce an item than expected. Overhead cost and volume variances are another cause for costs to be higher or lower than what was expected. The total manufacturing variance can be broken down by cost type (materials, labor, overhead) and further by cost variances within cost types and usage or efficiency variances within cost types: Total Manufacturing Cost Variance 7 ↑ Feedback Direct Materials Cost Variance Direct Labor Cost Variance Factory Overhead Cost Variance 7 Direct Materials Price Variance Direct Materials Quantity Variance Direct Labor Rate Variance Direct Labor Time Variance Variable Factory Overhead Controllable Variance Fixed Factory Overhead Volume Variance Manufacturing…
Responsibility for the fixed overhead volume variance is not assigned because fixed overhead costs do not change with activity changes. usually assigned to the production department. usually assigned to top management. usually assigned to the planning department. None of these.
Which one of the following may account for an adverse labour efficiency variance? a. Using higher grade materials leading to lower wastage rates O b. Change in labour-market conditions between the setting of the standard and the actual event O c. Higher purchase cost of raw materials d. Using a higher grade of worker than was planned Oe. Poor supervision
A major disadvantage of using a plantwide overhead rate is the extreme difficulty in gathering the needed information. True or False True False