COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Excellent employee training program
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Inefficient standard setting
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Ineffective purchasing agent
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Sudden rise price of materials
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Detailed explanation-1: -The correct answer is d) increased material cost per unit.
Detailed explanation-2: -An unfavorable variance can occur due to changing economic conditions, such as lower economic growth, lower consumer spending, or a recession, which leads to higher unemployment. Market conditions can also change, such as new competitors entering the market with new products and services.
Detailed explanation-3: -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-4: -An Unfavorable Materials Quantity Variance Indicates That-The Conclusion. A material quantity variance that is not in the company’s favor means that the company has used more material than planned. This is unfavorable because the company has spent more money than planned.