Question: Which ONE of the following is a possible cause for an UNFAVORABLE LABOR RATE variance? High factory machinery depreciation rates Low-quality materials Skilled workers doing jobs intended for less skilled workers Inexperienced workers Machines in need of repair.
What causes unfavorable variances?
Unfavorable variances refer to instances when costs are higher than your budget estimated they would be. A variance in your budget is often caused by improper budgeting where the baseline that has been set up has not been reasonably measured against the actual results.
What are some possible causes of variances?
Causes of Variances Posted In: Managerial Accounting
- Change in market price.
- Change in delivery cost.
- Emergency purchases which may be due to upsets in production program, slackness of store keepers, non-availability or funs etc.
- Inefficient buying.
- Untimely buying.
- Non-availability of standard quality of material.
Which of the following could cause a labor efficiency variance?
Causes for favorable labor efficiency variance may include: Hiring of more higher skilled labor (this may adversely impact labor rate variance). Training of work force in improved production techniques and methodologies. Use of better quality raw materials which are easier to handle.
Which of the following is indicated if there’s a debit balance in the labor efficiency variance?
A debit balance in the labor-efficiency variance account indicates that: budget at actual levels of activity reached and fixed overhead applied. The production volume variance is computed by the difference between the: budgeted selling price multiplied by the actual number of units sold.
What does an unfavorable variance indicate?
What Is Unfavorable Variance? Unfavorable variance is an accounting term that describes instances where actual costs are greater than the standard or projected costs. An unfavorable variance can alert management that the company’s profit will be less than expected.
What are the different types of variances?
Types of variances
- Variable cost variances. Direct material variances. Direct labour variances. Variable production overhead variances.
- Fixed production overhead variances.
- Sales variances.
What are key variances?
Variance analysis is a key element of performance management and is the process by which the total difference between flexed standard and actual results is analysed. A number of basic variances can be calculated. If the results are better than expected, the variance is favourable (F).
What does an unfavorable labor efficiency variance indicate?
A labor variance that is a negative number is unfavorable and can result in profit that is lower than expected. An unfavorable variance occurs when actual direct labor costs are more than standard costs. Also, what does a favorable labor efficiency variance indicate?
What causes an unfavorable direct material efficiency variance?
Conversely, a favorable direct materials efficiency variance results when fewer materials are used than planned. A miscalculation in the accounting for materials may result in a one-time or temporarily unfavorable direct material efficiency variance. However, in a situation where the original budgeted standard for materials was…
What’s the difference between a favorable and unfavorable variance?
A favorable variance occurs when your actual direct labor costs are less than your standard, or budgeted, costs. A labor variance that is a negative number is unfavorable and can result in profit that is lower than expected. An unfavorable variance occurs when actual direct labor costs are more than standard costs.
What are the causes of variance in overhead efficiency?
Reason for Overhead Efficiency Variance Following are the possible causes of this variance: Poor working conditions Inefficiency of labor Poor supervision Poor scheduling of production processes Use of inferior material and defective tools Improperly set standards
