The following are seven technical terms introduced in this chapter. Spending variance Materials price variance Standard costs Labor rate variance Materials quantity variance Volume variance Labor efficiency variance Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term discussed, or answer "None" if the statement does not cor- rectly describe any of the terms.
The following are seven technical terms introduced in this chapter. Spending variance Materials price variance Standard costs Labor rate variance Materials quantity variance Volume variance Labor efficiency variance Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term discussed, or answer "None" if the statement does not cor- rectly describe any of the terms.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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24.1
Transcribed Image Text:The following are seven technical terms introduced in this chapter.
Spending variance
Materials price variance
Standard costs
Labor rate variance
Materials quantity variance
Volume variance
Labor efficiency variance
Each of the following statements may (or may not) describe one of these technical terms. For each
statement, indicate the accounting term discussed, or answer "None" if the statement does not cor-
rectly describe any of the terms.
а.
The budgeted costs of producing a product under normal conditions.
The dollar amount associated with the difference between the actual direct labor hours required
and the standard number of direct labor hours allowed for a given level of production under
b.
normal conditions.
с.
A variance that is always favorable when actual production levels exceed normal levels.
The portion of the total materials variance caused by using more or less material than allowed
d.
for a given level of output.
The portion of the total overhead variance caused by incurring more overhead costs than
allowed for a given level of production.
f. The portion of the total materials variance for which a company's purchasing agent is often
responsible.
е.
The portion of the total labor variance that is related to the differences between the actual
hourly wages paid and the budgeted standard wage.
g.
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