Question

10-5 if the materials price varience is faverable but the materials quantity is unfaverable, what might this indicate?

10-7 our workers are all under labor contracts; therefore, our labor rate varience is bound to be zero." Discuss

10-8 what effect if any, would you expect poor-quality materials to have on direct labor variances?

Answer 1

10-5 -->>WHEN the materials price varience is faverable but the materials quantity is unfavorable. • This combination of variances may indicate that inferior quality materials were purchased at a discounted price, but the low-quality materials created production problems.

•The materials price variance is usually the responsibility of the purchasing manager.

• The materials quantity and labor efficiency variances are usually the responsibility of production managers.

10-7-->> • Several factors other than the contractual rate paid to workers can cause a labor rate variance.

• Like , skilled workers with high hourly rates of pay can be given duties that require little skill and that call for low hourly rates of pay, resulting in an unfavorable rate variance.

• Likewise unskilled or untrained workers can be assigned to tasks that should be filled by more skilled workers with higher rates of pay, resulting in a favorable rate variance. • Unfavorable labour rate variances can also arise from overtime work at premium rates.

10-8 ->> • If poor quality materials create production problems and a result could be excessive labor time and therefore , an unfavorable labor efficiency variance.

• Poor quality materials would not ordinarily affect the labor rate variance.