Accounting
27th Edition
ISBN: 9780357155899
Author: Carl S. Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning US
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Textbook Question
Chapter 23, Problem 4DQ
The materials cost variance report for Nickols Inc. indicates a large favorable materials price variance and a significant unfavorable materials quantity variance. What might have caused these offsetting variances?
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Should both favorable and unfavorable variances be investigated, or only the unfavorable ones? Explain your response. What if a company found that they had a favorable price variance and an unfavorable quantity variance for direct materials. What might be the cause(s) of this pattern of variances?
What is a materials price variance? Describe this in your own words. Writing a formula is not a sufficient answer. Provide a real world example that would result in an unfavorable materials price variance
the material cost variance of a company indicates a large favorable material price variance and a significant unfavorable material quantity variance. what might cause these offsetting variances?
Chapter 23 Solutions
Accounting
Ch. 23 - What are the basic objectives in the use of...Ch. 23 - What is meant by reporting by the principle of...Ch. 23 - What are the two variances between the actual cost...Ch. 23 - The materials cost variance report for Nickols...Ch. 23 - a. What are the two variances between the actual...Ch. 23 - Prob. 6DQCh. 23 - Would the use of standards be appropriate in a...Ch. 23 - a. Describe the two variances between the actual...Ch. 23 - If variances are recorded in the accounts at the...Ch. 23 - Briefly explain why firms might use nonfinancial...
Ch. 23 - Direct materials variances Bellingham Company...Ch. 23 - Direct materials variances Dvorak Company produces...Ch. 23 - Direct labor variances Bellingham Company produces...Ch. 23 - Direct labor variances Dvorak Company produces a...Ch. 23 - Factory overhead controllable variance Bellingham...Ch. 23 - Factory overhead controllable variance Dvorak...Ch. 23 - Factory overhead volume variance Bellingham...Ch. 23 - Factory overhead volume variance Dvorak Company...Ch. 23 - Standard cost journal entries Bellingham Company...Ch. 23 - Standard cost journal entries Dvorak Company...Ch. 23 - Income statement with variances Prepare an income...Ch. 23 - Income statement with variances Prepare an income...Ch. 23 - Prob. 23.7APECh. 23 - Prob. 23.7BPECh. 23 - Standard direct materials cost per unit Roanoke...Ch. 23 - Standard product cost Sana Rosa Furniture Company...Ch. 23 - Budget performance report Genie in a Botile...Ch. 23 - Direct materials variances The following data...Ch. 23 - Direct materials variances Silicone Engine Inc....Ch. 23 - Standard direct materials cost per unit from...Ch. 23 - Standard product cost, direct materials variance...Ch. 23 - Direct labor variances The following data relate...Ch. 23 - Direct labor variances La Barte Company...Ch. 23 - Direct tabor variances Greeson Clothes Company...Ch. 23 - Direct labor standards for nonmanufacturing...Ch. 23 - Direct labor standards for a service company One...Ch. 23 - Direct labor variances for a service company...Ch. 23 - Direct materials and direct labor variances At the...Ch. 23 - Flexible overhead budget Leno Manufacturing...Ch. 23 - Flexible overhead budget Wiki Wiki Company has...Ch. 23 - Factory overhead cost variances The following data...Ch. 23 - Factory overhead cost variances Blumen Textiles...Ch. 23 - Factory overhead variance corrections The data...Ch. 23 - Factory overhead cost variance report Tannin...Ch. 23 - Recording standards in accounts Cioffi...Ch. 23 - Recording standards in accounts The Assembly...Ch. 23 - Income statement indicating standard cost...Ch. 23 - Prob. 23.24EXCh. 23 - Nonfinancial performance measures Alpha University...Ch. 23 - Direct materials and direct labor variance...Ch. 23 - Flexible budgeting and variance analysis I Love My...Ch. 23 - Direct materials, direct labor, and factory...Ch. 23 - Factory overhead cost variance report Tiger...Ch. 23 - Standards for nonmanufacturing expanses Code Head...Ch. 23 - Direct materials and direct labor variance...Ch. 23 - Flexible budgeting and variance analysis Im Really...Ch. 23 - Direct materials, direct labor, and factory...Ch. 23 - Factory overhead cost variance report Feeling...Ch. 23 - Prob. 23.5BPRCh. 23 - Genuine Spice Inc. began operations on January 1...Ch. 23 - Ethics in Action Dash Riprock is a cost analyst...Ch. 23 - Communication The senior management of Tungston...Ch. 23 - Variance interpretation You have been asked to...Ch. 23 - Variance interpretation Vanadium Audio Inc. is a...
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- Acme Inc. has the following information available: A. Compute the material price and quantity, and the labor rate and efficiency variances. B. Describe the possible causes for this combination of favorable and unfavorable variances.arrow_forwardWhich of the following is a possible cause of an unfavorable material price variance? A. purchasing too much material B. purchasing higher-quality material C. hiring substandard workers D. buying substandard materialarrow_forwardUse the information provided to answer the questions. All material purchased was used in production. A. What is the standard price paid for materials? B. What is the direct materials quantity variance? C. What is the total direct materials cost variance? D. If the direct materials price variance was unfavorable, what would be the standard price?arrow_forward
- What are some possible reasons for a material price variance? A. substandard material B. labor rate increases C. labor rate decreases D. labor efficiencyarrow_forwardWhich of the following is a possible cause of an unfavorable material quantity variance? A. purchasing substandard material B. hiring higher-quality workers C. paying more than should have for workers D. purchasing too much materialarrow_forwardIdentify several causes of an unfavorable material price variance.arrow_forward
- 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.arrow_forwardWhich of the following is the most likely explanation for an unfavorable materials usage variance and a favorable labor wage variance? a. The new labor contract increased wages. b. Higher quality materials were purchased, resulting in less waste. c. The company experience labor turnover and newer, less experienced workers were hired. d. A new supplier offered a lower price for materials.arrow_forwardIdentify several causes of a favorable material price variance.arrow_forward
- When is the material price variance favorable? A. when the actual quantity used is greater than the standard quantity B. when the actual quantity used is less than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual price is less than the standard pricearrow_forwardWhat effect, if any, would you expect poor-quality materials to hare on direct labor variances?arrow_forwardA favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following? More expensive, superior materials requiring more than the standard amount were used in production. Less expensive, inferior materials requiring more than the standard amount were used in production. Less expensive, inferior materials requiring less than the standard amount were used in production. More expensive, superior materials requiring less than the standard amount were used in production.arrow_forward
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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY