What are some reasons for a material quantity variance? 1)Building rental charges increase 2)Labor rate decreases 3)More qualified workers 4)Change in the actual cost of materials
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The manager of a manufacturing firm received the following information related to the last period's direct materials and direct labor variances: Direct materials price variance . . . . . . . . . . . . . . . . . Favorable Direct materials quantity variance . . . . . . . . . . . . . . Favorable Direct labor rate variance . . . . . . . . . . . . . . . . . . Unfavorable Direct labor efficiency variance . . . . . . . . . . . . . . . Favorable a. Ignoring all other variances, what are possible reasons for a favorable direct materials price variance? b. Given that the quality of direct materials purchased was exactly as expected, how would you explain the above combination of the four variances?
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Indicate how each of the following would shift the (1) marginal-cost curve, (2) average-variable-cost curve, (3) average-fixed-cost curve, and (4) average-total-cost curve of a manufacturing firm. In each case specify the direction of the shift. a. A reduction in business property taxes. b. An increase in the nominal wages of production workers. c. A decrease in the price of electricity. d. An increase in insurance rates on plant and equipment. e. An increase in transportation costs.
Justin Co. recently purchased materials from a new supplier at a very attractive price. The materials were found to be of poor quality, and the company's laborers struggled significantly as they shaped the materials into the finished product. In a desperate move to make up for some of the time lost, the manufacturing supervisor brought in more senior employees from another part of the plant. Which of the following variances would have a high probability of arising from this situation? a. Both Material Price variance, favorable and Labor rate variance, favorable b. Material price variance, unfavorable. c. Labor rate variance, unfavorable. d. Material quantity variance, favorable. e. Labor efficiency variance, favorable.
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Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
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