COST ACCOUNTING
STANDARD COSTING AND VARIANCE ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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favourable material usage
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adverse material usage
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favourable material price
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favourable labour efficiency
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adverse labour efficiency
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Detailed explanation-1: -Reasons for adverse material price variance include: An overall hike in the market price of materials. Loss of purchase discounts due to smaller order sizes. Purchase of materials of higher quality than the standard (this will be reflected in favorable material usage variance) Increase in bargaining power of suppliers.
Detailed explanation-2: -Which of the following factors should not be considered when deciding whether to investigate a variance? the difference between the actual cost of material purchased and the standard cost of material purchased.
Detailed explanation-3: -Causes of the Materials Price Variance Market-driven pricing changes, such as changes in the prices of commodities. Bargaining power changes by suppliers, who may be able to impose higher prices than expected. Buying in unusually large or small volumes in comparison to what was expected when the standard was created.
Detailed explanation-4: -A favourable labour efficiency variance is likely to have been caused by: trade union conflicts.