Which of the following statements is true?1. The variable overhead efficiency variance does not actually measure how efficiently variable manufacturing overhead resources were used.2. The variable overhead efficiency variance measures the difference between the actual level of activity and the standard activity allowed for the actual output, multiplied by the variable part of the predeterminedoverhead rate.3. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to have a favorable labor rate variance and unfavorable variable overhead rate variance for the same period.

2. If variable manufacturing overhead is applied based on direct labor-hours, it is impossible to…

Answered: Which of the following statements is…

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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Determine the variances for A, B, and C.
arker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year llows: Direct materials (plastic) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($345,800 910,000 units) arker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 1,040,000 11,400,000 $ 9,120,000 308,000 $ 3,449,600 $ 689,000 $365,000 Standard Unit C $9.96 3.15 0.66 0.38
Which of the following statements about fixed overhead variances is FALSE? An unfavorable volume variance means that a firm’s production facilities were under-utilized by producing less units of products than budgeted. Fixed overhead variances consist of a budget variance and a volume variance. The volume variance is a measure of facility utilization. The budget variance represents the difference between the original budgeted fixed overhead cost and the applied fixed overhead cost during a period.
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1. What are the three primary reasons of using a standard cost system? In a business that routinely manufactures the same products or performs the same services, why are standards helpful? 2. What are ideal standards? What are currently attainable standards? Explain which standard is usually adopted and why. 3. Some people suggest that the direct labor rate variance is never controllable. Do you agree or disagree? Give reasons to support your answer.
If a company uses predetermined rate for absorption of manufacturing overhead, the volume variance is O The under- or over-applied fixed cost element of overhead. O The difference between budgeted cost and actual cost of variable overhead items. O The difference between budgeted cost and actual cost of fixed overhead items. O The under- or over-applied variable cost element of overhead.
Which of the following is true of direct labor variances? a. The labor efficiency variance measures the difference between what was paid to direct laborers and what should have been paid. b. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that should have been used. c. The labor rate variance measures the difference between the labor hours that were originally budgeted and the labor hours that should have been used. d. The labor rate and labor efficiency variances will always add up to the total labor variance. e. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that were originally budgeted.
An unfavorable overhead volume variance Indicates: Multiple Choice The actual variable overhead rate was less than the standard rate. The actual variable overhead rate was greater than the standard rate. Actual production was less than budgeted. Actual production was more than budgeted. 券

The direct labor rate variance is calculated by multiplying the standard hours that should have been worked for the actual output by the difference between the standard labor rate and the actual labor rate. O True O False
1.What is the labor rate variance ( indicate the effect of each variance by selecting "f" for favorable, U for unfavorable, and None for no effect and round your final answer to the nearest whole number) 2. What is the variable overhead efficiency variance ? ( indicate the effect of each variance by selecting "f" for favorable, U for unfavorable, and None for no effect and round your final answer to the nearest whole number) 3. what is the variable overhead rate variance?
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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.

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