What might an unfavorable price variance for direct materials indicate?
Total Direct Materials Cost Variance An unfavorable outcome means the actual costs related to materials were more than the expected (standard) costs. If the outcome is a favorable outcome, this means the actual costs related to materials are less than the expected (standard) costs.
What causes an unfavorable direct labor efficiency variance?
An unfavorable direct labor efficiency variance happens when the actual hours worked is greater than the expected or standard hours. The company used more time in producing its products than anticipated.
What does an Unfavourable efficiency variance mean?
An unfavorable variance means that labor efficiency has worsened, and a favorable variance means that labor efficiency has increased.
How do you calculate direct materials efficiency variance?
The actual cost less the actual quantity at standard price equals the direct materials price variance. The difference between the actual quantity at standard price and the standard cost is the direct materials quantity variance. The total of both variances equals the total direct materials variance.
What causes unfavorable material quantity variance?
A materials quantity variance compares the actual and expected direct material used in manufacturing a product. You have an unfavorable materials quantity variance when you use more material than expected. It’s favorable when you use less material than planned.
What are the reasons for unfavorable material variance?
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.
How do you know if efficiency variance is favorable or unfavorable?
Understanding Variable Overhead Efficiency Variance If actual labor hours are less than the budgeted or standard amount, the variable overhead efficiency variance is favorable; if actual labor hours are more than the budgeted or standard amount, the variance is unfavorable.
Which of the following Cannot be a reason of unfavorable direct materials price variance?
39,550, thestandard direct labor rate was Rs….
| Q. | which of the following cannot be a reason of unfavorable direct materials price variance? |
|---|---|
| B. | Quality of materials purchased |
| C. | Appointment of inexperienc |
| D. | workers D Inefficient standard setting |
| Answer» c. Appointment of inexperienc |