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Name: Which of the following conditions might cause a material variance? Sta
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Description: Which of the following conditions might cause a material variance? Statement 1: Fluctuations in market prices of materials Statements 2: Use of defective or substandard materials Group of choices:Statements 2 onlyBoth statementsStatements 1 onlyBoth

Business

Accounting

Which of the following conditions might cause a material variance?

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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19. An adverse material usage variance together with a favourable materials price variance could suggest that: a) We are paying less for our materials than expected but we are using more materialsb) We are paying higher prices for our materials than expected c) We are paying less for our materials and we are using less than expectedd) We are using less material than expected but we are paying more than we should
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A-6
1-What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor. 2-How do you balance a firm’s need to succeed and the need for not asking the workers for perfection? 3-What two components are needed to determine a standard for materials? 4-What makes a variance favorable? Give an example of a favorable variance involving materials. What makes a variance unfavorable? Give an example of an unfavorable variance involving labor.
TRUE OR FALSE When actual production volume is less than expected volume, the production volume variance is unfavorable
3. Some people suggest that the direct labor rate variance is never controllable. Do you agree or disagree? Give reasons to sSupport your answer.
se III) a) b) C) d) explain the meaning of the term/technique, give two examples of its application, explain some of the practical limitations of which users should be aware with regard to the term/technique. Indirect costs Equivalent units Contribution Direct material yield variance
What effect, if any, would you expect poor-quality materials to hare on direct labor variances?
Which of the following is a possible cause of an unfavorable material quantity variance? A) paying more than should have for workers B) purchasing too much material C) hiring higher-quality workers D) purchasing substandard material
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18. Which statement is untrue regatding material standards?A. Waste and reject allowances are included in material standardsB. The standard material cost allows for the best material available to avoid wasteC. Material price variance should reflect net of any discount except if the discount is taken or notD. Standard price should reflect the final delivered costs of materials inclusive of allowance for handling costs.E. Answer not given
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.