An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period. [S2] If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor efficiency variance and unfavorable variable overhead efficiency variance for the same period. Only S1 is true Only S2 is true Both statements are true. Both statements are false.
An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period. [S2] If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor efficiency variance and unfavorable variable overhead efficiency variance for the same period. Only S1 is true Only S2 is true Both statements are true. Both statements are false.
Chapter1: Financial Statements And Business Decisions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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[S1] An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period. [S2] If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor efficiency variance and unfavorable variable overhead efficiency variance for the same period.
Only S1 is true
Only S2 is true
Both statements are true.
Both statements are false.
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