Homework Assignment11

Homework Assignment11 - quantity is greater than the...

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Bus 215 Section 8 October 31, 2010 Homework Assignment: Chapter 11 Q11-3) Management by exception: A management system in which standards are set for various activities, with actual results compared to these standards. Significant deviations from standards are flagged as exceptions. Q11-6) The materials price variance can be computed at two different points in time – when the materials are purchased or when they are used in production. Computing the materials price variance when materials are purchased is more ideal because of two reasons. First, delaying the computation of the price variance until the materials are used would result in less timely variance reports. Second, computing the price variance when the materials are purchased allows materials to e carried in the inventory accounts at their standard cost. Q11-7) If the materials price variance is favorable, meaning actual purchase price is less than the standard purchase price, and the materials quantity variance is unfavorable, meaning the actual
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Unformatted text preview: quantity is greater than the standard quantity, then it indicates that all the material purchased during the month was also used during the month. Q11-10) The possible effects of poor-quality materials on direct labor variances would result in an unfavorable labor efficiency variance. Q11-11) If variable manufacturing overhead is applied to production on the basis of direct labor hours and the direct labor efficiency variance is unfavorable, the variable overhead efficiency will be unfavorable. The reason for this is because the variable overhead efficiency variance is exactly the same as the direct labor efficiency variance except for the rate that is used to translate the variance into dollars. In the case of the direct labor efficiency, the difference (the variance) is multiplied by the direct labor rate whereas in the case of variable overhead efficiency variance, the difference is multiplied by the variable overhead rate....
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This note was uploaded on 01/06/2012 for the course BUSINESS 215 taught by Professor Patriciamcquaid during the Fall '10 term at Cal Poly.

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