An 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.

An 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.

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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The calculation of direct labour variances shows a favourable labour rate variance of £2,600 and an adverse labour efficiency variance of £3,200. Which ONE of the following sentences is the best interpretation of this result? C O A. The department has introduced new methods of working and there have been overtime payments to compensate for extra hours of working OB. A machine was not working, leading to idle time for which the employees should not be blamed C. A lower grade of employee has been employed compared with the grade used for the budget, but the employees have taken a longer time to complete the work required D. The union has negotiated higher-than-expected pay increases
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
Why is the identification of favorable and unfavorable variances so important to a company? How can the identification of the variances help management control costs? Please explain. Considering the flexible budgeting topic, it is important to look at this analysis as a significant contribution to the management of the company. Knowing what the bottom line profit or loss is important. But what is more important is to understand how your actual results varied in terms of units sold versus how the actual cost of each unit differed from the budget. What is a good example of this?
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QUESTION 6 Which of the following may be the likely reason for a favorable direct labor rate variance? O overestimated standard labor cost, O changes to the product specification which reduced manufacturing time. O reduction in direct labor costs due to a strike in the factory. O overestimated standard labor time per unit.
Top of Form Multiple Choice Theories Choose the best answer. A cost variance of zero indicates that the manufacturing management was * able to control production cost below budgeted costs. unable to keep production costs at budgeted costs even if the purchasing department was able to keep the budgeted price. able to control production costs at budgeted costs. unable to keep production costs at budgeted costs. In gross profit analysis, a favorable cost of sales variance that includes an unfavorable cost volume variance will mean: * The production department was able to control costs within the budget but the purchasing department went over the budget. The purchasing department was able to control costs within the budget but the production department over the budget. The production and purchasing department were able to control costs within the budget. The production and purchasing departments went over the budget. Variance that arises solely because the actual units sold differs from…
All of our workers are under labor contracts. That means our labor rate variance must be zero.
Which of the following statements about fixed overhead variances is FALSE? O The budget variance represents the difference between the original budgeted fixed overhead cost and the applied fixed overhead cost during a period. O An unfavorable volume variance means that a firm's production facilities were under-utilized by producing less units of products than budgeted. O The volume variance is a measure of facility utilization. O Fixed overhead variances consist of a budget variance and a volume variance. Ne: Previous
Which of the following statements is true regarding a predetermined overhead rate based on capacity? Multiple Choice It is usually lower than a predetermined overhead rate based on budgeted output for the coming period. It is usually higher than a predetermined overhead rate based on budgeted output for the coming period. It will usually be the same as a predetermined overhead rate based on budgeted output for the coming period. It is most often used for external financial reporting purposes.
Find the values of the missing items. Assume that the actual sales volume equals actual production volume. (There are no inventory level changes.) (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.) Sales revenue Variable manufacturing costs Variable marketing and administrative costs Contribution margin Reported Income Statement (2,600 units) $ 132,600 $ 85,000 Manufacturing Variance $ 4,420 F Marketing and Administrative Variance Sales Price Variance Flexible Budget Sales Activity (2,600 Variance units) $ 143,000 1,520 F Master Budget (2,700 units) 16,200
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Hello, my follow up question is as follows: Is the $90 for the fixed factory overhead volume variance favorable or unfavorable?