Give the complete formula describing what costs would be debited to Work-in-Proc

Question

Give the complete formula describing what costs would be debited to Work-in-Process in a standard costing system.

i.e. _________ price x _________ quantity for ____________

To what account would any variance ultimately be charged in a standard costing system? Correct answer is NOT the variance accounts.

What distinction must be made when computing the materials price variance vs. the materials quantity variance that is not an issue with the direct labor or variable overhead variances? Be sure to state why.

What does an unfavorable direct labor efficiency variance mean? Who is responsible?

What does a favorable direct materials price variance mean? Who is responsible?

Explanation / Answer

Answer: Direct labor efficiency variance:This variance tells us how efficient the direct labor was in making the actual output that was produced by the direct labor.

Unfavourable direct labor variance means lower productivity of direct labor during a period compared with the standard.The manager in charge of production is generally considered responsible for labor efficiency variance

Answer:

A favorable material price variance suggests cost effective procurement by the company.

Reasons for a favorable material price variance may include:

The purchase manager has control over the price paid for goods and is therefore responsible for any price variation.

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