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Can materials price variance reported to the production department that did the work?
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Why a favorable fixed overhead expenditure variance might be reported?
The price variance might result from use of cheaper but inferior quality materials hence though it will be cheaper , the final product will be compromised .
Is the volume variance a controllable variance from a spending point of view?
No, the volume variance is controllable but not related to spending. The volume variance calculates the dollar impact of producing more or less than the budgeted production volume. No, the volume variance is controllable but not related to spending. The volume variance calculates the dollar impact of producing more or less than the budgeted production volume.
Fixed-overhead budget variance?
Fixed overhead budgeted variance is the difference between estimated budgeted cost and actual fixed overhead cost of production.
Why are variances generally segregated in terms of a price variance and an efficiency variance?
Efficiency Varian materials and direct labor, the variances were recorded in specific general ledger accounts.
What difference between a favorable variance and an unfavorable variance?
Favourable variance is that variance which is good for business while unfavourable variance is bad for business
What does a favorable direct materials efficiency variance indicate?
A favorable direct materials efficiency variance indicates that you are using less material in production than was budgeted for.
Which department is often responsible for the direct materials price variance?
Receiving can affect direct materials price variances if there is no inventory. The accounting department will mark up prices to reflect a shortage.
Labor Efficiency Variance resulting from the use of poor quality materials should be charged to?
the production manager
Why a favorable fixed overhead expenditure variance might be reported?
The price variance might result from use of cheaper but inferior quality materials hence though it will be cheaper , the final product will be compromised .
What are the variances in a 4 variance analysis?
efficiency variance, spending variance, production volume variance, variable and fixed components
Causes of direct material quantity variance?
Some causes of direct material quantity variance are poor quality materials, untrained workers, and lack of supervision. Production managers should look at and determine the causes.
What is material cost variance?
The material cost variance denoting the difference between the standard cost of materials and actual cost of matrials. The material cost variance is between the standard material cost for actual production in units and actual cost. The total cost is usually determined by two differenct factors of influence viz quantity of materials utilized/ required and price of the materials. The fluctuations in the material cost are only due to the fluctuations in the utility of materials due to many factors. Material cost variance can be computed into two different ways: DIRECT METHOD AND INDIRECT METHOD material cost variance= Standard cost of materials for actual output- actual cost of raw materials. MCV=(S Q AO X SP)-(AQ X AP) Indirect Method: material cost variance= Material price variance (MPV)+Material usage Variance
Is the volume variance a controllable variance from a spending point of view?
No, the volume variance is controllable but not related to spending. The volume variance calculates the dollar impact of producing more or less than the budgeted production volume. No, the volume variance is controllable but not related to spending. The volume variance calculates the dollar impact of producing more or less than the budgeted production volume.
Is the materials price variance the least significant from a standpoint of cost control?
NO - Fixed Overhead Volume Variance
Budgetary control system?
Budgetary Control concerns itself with the total costs for each department. Each variance is the responsibility of the official who is in charge of the department in which it arises. This official must then explain the cause of the variance and take to prevent its recurrence.
Fixed-overhead budget variance?
Fixed overhead budgeted variance is the difference between estimated budgeted cost and actual fixed overhead cost of production.
Why a favorable direct materials price variance might be of concern?
A favorable direct materials price variance may be the result of the purchase of cheaper materials that may be of inferior quality, thereby causing an inferior product. An inferior quality can also cause more spoilage and waste.
