COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Increase in direct materials prices is not likely to be a reason of unfavorable direct labor efficiency variance
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Yes
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No
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Explanation:
Detailed explanation-1: -Theft of materials, spoilage and damage to materials caused by workers, worker errors or insufficiently trained workers on a production line or in a service industry are reasons for unfavorable direct material efficiency variances.
Detailed explanation-2: -Answer and Explanation: B) Low-quality materials. No, this will cause materials quantity variance, but normally not direct labor variances.
Detailed explanation-3: -An unfavorable variance means that labor efficiency has worsened, and a favorable variance means that labor efficiency has increased.
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