ACC 213: Chapter Ten Handouts True/False 1. Waste on the production line will re

Question

ACC 213: Chapter Ten Handouts True/False 1. Waste on the production line will result in an unfavorable materials price variance. 2. When the materials se, raw inventory at standard cost 3. Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances 4. The materials price variance is computed based on the amount of materials purchased during the period. 5. The standard price per unit for direct materials should reflect the final, delivered cost of the materials. 6. In general, the production manager is responsible for the material's price variance. 7. An unfavorable 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. 8. The labor rate variance measures the difference be rate, multiplied by the standard hours allowed for the actual output tween the actual hourly rate and the standard hourty 9. If the actual hourly rate is greater than the standard hourly rate, the labor rate variance is labeled unfavorable (U) 10. The labor efficiency variance is labeled favorable (F) if the actual hours used is less than the standard hours allowed for the actual output 11. If skilled workers with high hourly rates of pay are given duties that require little skill and call for lower hourly rates of pay, this will result in a favorable labor rate variance 12. The standard labor rate per hour should not include any employment taxes 13. When more hours of labor time are necessary to complete a job than the standard allows, the labor efficiency variance is unfavorable 14. If demand is insufficient to keep everyone busy and workers are not laid off, a favorable (F) labor efficiency variance often will be a result

Explanation / Answer

1. False

Correct Statement: Waste on the production line will result in an unfavorable materials quantity variance

2. True

3. True

4. True

5. True

6. False.

Correct Statement: In general the purchase manager is responsible for the material price variance.

7. False

Correct Statement: An unfavorable materials quantity variance occurs when the actual quantity used in production is more than the standard quantity allowed for the actual output of the period.

8. False.

Correct Statement: The labor rate variance measures the difference between the actual hourly rate and the standard hourly rate, multiplied by the actual hours used for the actual output.

9. True

10. True

11. False

Correct Statement: If skilled workers with high hourly rates of pay are given duties that require little skill and lower hourly rates of pay, this will result in a unfavorable labor rate variance.

12. False

Correct Statement: The standard labor rate per hour should include any employment taxes.

13. True

14. False

Correct Statement: If demand is insufficient to keep everyone busy and workers are not laid off, a unfavoable labor efficiency variance often will be a result.

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