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Name: 1. In 2020 standard cost variance analysis report presented by the con
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Description: 1. In 2020 standard cost variance analysis report presented by the controller of ABC Corporation, the labor cost variance shows that efficiency has resulted to favorable variance, while rate shows unfavorable variance. Which of the following could ha

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter8: Standard Cost Accounting—materials, Labor, And Factory Overhead

Section: Chapter Questions

Problem 13E: Using variance analysis and interpretation Last year, Wrigley Corp. adopted a standard cost system....

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1. In 2020 standard cost variance analysis report presented by the controller of ABC Corporation, the labor cost variance shows that efficiency has resulted to favorable variance, while rate shows unfavorable variance. Which of the following could have been the reason for the said outcome?

a) The workers assigned in the production department were experienced and skilled individuals and relatively high paid

b) The workers assigned by the human resources management were unskilled and relatively low paid

c)The workers were pushed to over time due to inefficiency in making the product.

d) Low quality materials were used and caused more labor hours to be produced

Which of the following would result to a favorable volume variance?

a)There is a favorable spending variance

b)Production is equal to sales

c)There is a favorable efficiency variance

d)Production is greater than budgeted

3. Which of the following variances is least likely to be controlled by manager?

a)Materials usage variance

b)Labor usage variance

c)Fixed spending variance

d)Volume variance

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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