Fundamentals Of Cost Accounting (6th Edition)
6th Edition
ISBN: 9781259969478
Author: WILLIAM LANEN, Shannon Anderson, Michael Maher
Publisher: McGraw Hill Education
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Textbook Question
Chapter 16, Problem 16CADQ
“My firm has a wage contract with the union. Therefore, we do not need to compute a labor price variance; it will always be zero.” Comment.
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“Our workers are all under labor contracts; therefore, our labor rate variance is bound to be zero.”Discuss.
All of our workers are under labor contracts. That means our labor rate variance must be zero.
Which of the following statements might cause a labor efficiency variance?
Statement 1 – Hiring of workers with pay higher than that assumed when the standard for a job was set.
Statement 2 – Lack of training for workers
Group of choices:
None of the statements
Statement 1 only
Statement 2 only
Both Statement
Chapter 16 Solutions
Fundamentals Of Cost Accounting (6th Edition)
Ch. 16 - What are the advantages of the contribution margin...Ch. 16 - How can a budget be used for performance...Ch. 16 - The flexible budget for coats it computed by...Ch. 16 - A flexible budget is: a. Appropriate for control...Ch. 16 - What is the standard cost sheet?Ch. 16 - What is the basic difference between a mailer...Ch. 16 - Standards and budgets are the same thing. True or...Ch. 16 - Actual direct materials costs differ from the...Ch. 16 - Fixed cost variances are computed differently from...Ch. 16 - What is the advantage of preparing the flexible...
Ch. 16 - What is the link between flexible budgeting and...Ch. 16 - Actual revenues are greater than budgeted for...Ch. 16 - Pick an organization you know, such as a school,...Ch. 16 - Give two reasons why dividing production cost...Ch. 16 - Prob. 15CADQCh. 16 - My firm has a wage contract with the union....Ch. 16 - Prob. 17CADQCh. 16 - The production volume variance should be charged...Ch. 16 - Prob. 19CADQCh. 16 - Prob. 20CADQCh. 16 - Flexible Budgeting The master budget at Western...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Refer to the data in...Ch. 16 - Flexible Budget Given the data shown in the...Ch. 16 - Fill in Amounts on Flexible Budget Graph Fill in...Ch. 16 - Flexible Budget Label (a) and (b) in the graph and...Ch. 16 - Prepare Flexible Budget Osage, Inc., manufactures...Ch. 16 - Sales Activity Variance Refer to the data in...Ch. 16 - Profit Variance Analysis Use the information from...Ch. 16 - Sales Activity Variance The following data are...Ch. 16 - Sales Activity Variance Selected data for October...Ch. 16 - Prob. 32ECh. 16 - Prob. 33ECh. 16 - Prob. 34ECh. 16 - Prob. 35ECh. 16 - Prob. 36ECh. 16 - Prob. 37ECh. 16 - Variable Cost Variances The following data reflect...Ch. 16 - Variable Cost Variances The records of Norton,...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - (Appendix used in requirement [b]) Variable Cost...Ch. 16 - Fixed Cost Variances Information on Carney...Ch. 16 - Prob. 43ECh. 16 - Prob. 44ECh. 16 - Fixed Cost Variances Mint Company applies fixed...Ch. 16 - Prob. 46ECh. 16 - Prob. 47ECh. 16 - (Appendix used in requirement [c]) Comprehensive...Ch. 16 - Comprehensive Cost Variance Analysis NSF Lube is a...Ch. 16 - Overhead Variances Brice Corporation shows the...Ch. 16 - Solve for Master Budget Given Actual Results A new...Ch. 16 - Find Missing Data for Profit Variance Analysis...Ch. 16 - Find Data for Profit Variance Analysis Required...Ch. 16 - Prob. 54PCh. 16 - Prepare Flexible Budget Odessa, Inc., reports the...Ch. 16 - Prob. 56PCh. 16 - Prob. 57PCh. 16 - Prob. 58PCh. 16 - Prob. 59PCh. 16 - Prob. 60PCh. 16 - Direct Materials Information about direct...Ch. 16 - Prob. 62PCh. 16 - Prob. 63PCh. 16 - Prob. 64PCh. 16 - Overhead Cost and Variance Relationships...Ch. 16 - Prob. 66PCh. 16 - Prob. 67PCh. 16 - Ethics and Standard Costs Farmer Franks produces...Ch. 16 - Comprehensive Variance Problem The standard cost...Ch. 16 - Prob. 70PCh. 16 - Find Actual and Budget Amounts from Variances JW...Ch. 16 - Variance Computations with Missing Data The...Ch. 16 - Comprehensive Variance Problem Sweetwater Company...Ch. 16 - Prob. 74PCh. 16 - Prob. 75PCh. 16 - Keewee Company manufactures a single product for...
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- Which of the following is a possible cause of an unfavorable labor efficiency variance? A. hiring substandard workers B. making too many Units C. buying higher-quality material D. paying too much for workersarrow_forwardAll of the following are possible causes of a favorable labor rate variance except: a lower mix of skilled workers causing hourly rates to be lower than anticipated. a new labor contract that was negotiated at lower pay rates than anticipated. a lower mix of unskilled workers causing hourly rates to be higher than anticipated. product demand that was lower than expected causing a reduction in the amount of overtime initially anticipated.arrow_forwardAn unfavorable direct labor cost variance occurs when a company: Group of answer choices Incurs more direct labor costs per unit than the standard direct labor cost per unit. Hires employees at a wage rate less than the standard rate. Pays more wages per hour than the standard rate. Uses more hours per unit of output than it should have used.arrow_forward
- 1. If demand is insufficient to keep everyone busy and workers are not laid off, which of the following labor efficiency variance often will be a result: A) favorable. B) unfavorable. C) zero. D) either favorable or unfavorable 2. A/an ______________ materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period. A) favorable. B) unfavorable. C) zero. D) either favorable or unfavorable 3. When the materials price variance is recorded at the time of purchase, raw materials are recorded as inventory at: A) replacement cost B) standard cost C) absorption cost D) actual cost 4.When more hours of labor time are necessary to complete a job than the standard allows, the labor efficiency variance is A) favorable. B) unfavorable. C) zero D) either favorable or unfavorable.arrow_forward(1) What is a direct labor variance and how is it calculated? (2) What factors might possibly lead to an unfavorable direct labor variance? (3) Briefly explain why firms might use nonfinancial performance measures.arrow_forwardHow does persistent favorable variances in an employees cost performance create a management challenge? Wouldn't we want all our employees creating favorable variances?arrow_forward
- Hello, my follow up question is as follows: Is the $90 for the fixed factory overhead volume variance favorable or unfavorable?arrow_forwardOf the several uses of standard costing, one of the most controversial is using these standards for performance evaluation of an individual, team, or unit. Consider the labor efficiency variance and assume it is one of the measures for a company’s performance evaluation of a business unit. When might or might not variance from such a standard be an appropriate measure? How would this metric’s effectiveness as a performance measure be affected by a decrease in demand or changes in production volume? Would its effectiveness be different for a service unit than a manufacturing unit? In the event that it is not effective as a performance measure, does it have a strong purpose?arrow_forward"As long as the total actual factory overhead cost is not significantly different from the total standard applied factory overhead cost for the period, there is no need to conduct further analyses of the factory overhead variances." Do you agree? Why, or why not?arrow_forward
- Which 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_forwardWhat are some possible reasons for a labor rate variance? A. hiring of less qualified workers B. an excess of material usage C. material price increase D. utilities usage changearrow_forwardAt the end of the period, the factory overhead account has a credit balance of 10,000. (a) Is the total factory cost variance favorable or unfavorable? (b) Are the controllable and volume variances favorable or unfavorable?arrow_forward
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