which of the following are common causes for labor efficiency variances? course hero

Following are the possible causes of this variance: Over or under sales demand Change in total capacity in number of men employed, number of shifts or machines used Loss of working hours due to inefficient planning Change in efficiency of labors and machines

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What does it mean when a variance is unfavorable?

Who is responsible for material quantity variances?

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Accounting Chapter 9 Flashcards | Quizlet

Study with Quizlet and memorize flashcards terms like The difference between an actual and a normal cost system is how _____ are recorded., The quantity and price of an input (i.e. ounces or pounds) that should be required to create a single unit of output is identified by a(n) _____ standard., When calculating the direct labor rate variance, take the actual hours worked times the _____ labor ...

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Fancy Nails' master budget for June was based on 2,400 manicures and supplies were budgeted at a total cost of $1,800. During June, 2,500 manicures were done and the total cost for supplies was $2,000.

Solved Which of the following statements is true: a. The | Chegg.com

Which of the following statements is true: a. The materials price variance is normally caused by the production department. b. Material quantity variances can be caused by inexperienced workers, faulty machinery, or carelessness.

What does it mean when a variance is unfavorable?

a. An unfavorable variance is always an indication of a problem that needs correction.

Who is responsible for material quantity variances?

a. Material quantity variances are generally the responsibility of the purchasing department.

Why is labor efficiency variance important?

Labor efficiency variance downplays the influence of external factors on labor analysis because it uses a standard hourly rate as part of its calculation. A production department may have little ability to control external factors, so labor efficiency variance is an ideal way to analyze changes to labor usage based on factors ...

What is labor variance?

Though it is most commonly used in manufacturing production, labor variance may be applied to any part of a business in which there's a compensation expense that can be compared to some baseline, such as a budget target or previous performance.

What is maximizing production efficiency?

In theory, maximizing production efficiency takes care of itself in the larger picture of overall profitability. In practice, each company can devise its own standard hourly rate, which may not reflect labor levels beyond the scope of internal efficiency.

What causes labor efficiency variance?

There are a lot of reasons of unfavorable direct labor efficiency variance. Some common reasons are as follows: 1 Inexperienced workers 2 Poorly motivated workers 3 Old or faulty equipment 4 Purchase of low quality or unsuitable direct materials 5 Poor supervision 6 Insufficient demand for company’s product 7 Frequent breakdowns 8 Shortage of raw materials 9 Just in time manufacturing system

Why is variance unfavorable?

The variance is unfavorable because labor worked 50 hours more than what was allowed by standard.

What is the difference between actual time incurred to manufacture a certain number of units and the time allowed by standards to?

The difference between actual time incurred to manufacture a certain number of units and the time allowed by standards to manufacture that number of units multiplied by standard direct labor rate is called direct labor efficiency variance or direct labor quantity variance.

Is the actual labor rate used to calculate variance?

Note: The actual direct labor rate is not used to compute this variance.

Is direct labor rate variance favorable or unfavorable?

Favorable and unfavorable variance: Like direct labor rate variance, this variance may be favorable or unfavorable. If workers manufacture a certain number of units in an amount of time that is less than the amount of time allowed by standards for that number of units, the variance is known as favorable direct labor efficiency variance.

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Why is it important to know the causes of variance?

Causes of Variances In order that variance analysis is of any use, it is essential to precisely determine causes of variances so that management may initiate action to rectify an unfavorable variance.

Why is variance analysis important?

In order that variance analysis is of any use, it is essential to precisely determine causes of variances so that management may initiate action to rectify an unfavorable variance. Reason for Material Price Variance.

What does it mean when a variance is unfavorable?

a. An unfavorable variance is always an indication of a problem that needs correction.

Who is responsible for material quantity variances?

a. Material quantity variances are generally the responsibility of the purchasing department.