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 price variance is recorded at the time of purchase, raw materials are recorded as 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 materials price variance. 7. An unfavorable materials quantity varianoe 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 between the actual hourly rate and the standard hourly rate, multiplied by the standard hours allowed for the actual output 9. If the actual hourty 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 alows, the labor efficiency variance is unfavorable 14. If demand is insufficient to keep everyone busy and workers are no laid off, a tavorable (F labor efficiency variance often will be a result

Explanation / Answer

1. Correct answer is False, because it will result in an unfavorable material usage variance

2. Correct answer is True

3. Correct answer is True

4. Correct answer is True

5. Correct answer is True

6. Correct answer is False, because purchase manager is responsible for materials price variance

7. Correct answer is False, because it is called favorable material quantity variance.

8. Correct answer is False, because labor rate variance measures the difference between the actual hourly rate and the standard hourly rate, multiplied by the actual hours allowed for the actual output.

9. Correct answer is True

10. Correct answer is True

11. Correct answer is False, because this will result in a unfavorable labor rate variance.

12. Correct answer is False, because it inlcudes employment taxes also.

13. Correct answer is True

14. Correct answer is False, because the correct answer is Unfavorable labor efficiency variance.

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