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10014_043010_18 - |-labor efficiency variance-| a Labor...

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a. Material Price variance: difference between what is paid for a given quantity to what should have been paid Who is responsible? Purchasing manager Why is there a variance? Bought in smaller lots, inflation, rush order, quality of materials b. Material Quantity variance: difference between the quantity used in production to what should have been used for the actual units produced (convert to SQ) Who is responsible? Production manager Why is there a variance? Machine breakdowns, untrained workers, inferior materials, poor management Better material, less handling 3. Direct Labor Variances AQ x AP AQ x SP AQ x SP SQ x SP |-------------labor rate variance----------|
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Unformatted text preview: |-----------labor efficiency variance-----| a. Labor Rate variance: difference between hourly rate actually paid to our workers to what should have been paid • Who is responsible? Production manager • Why is there a variance? Using a different labor class/more skilled vs. less skilled b. Labor Efficiency variance: measures productivity of the direct labor • Who is responsible? Production manager • Why is there a variance? Poor quality material, faulty equipment, poor supervision, poor demand 4. VOH Variances AQ x AP AQ x SP AQ x SP SQ x SP |-------VOH spending variance----------| |--------VOH efficiency variance--------|...
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