Managerial Accounting Chapter 10

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A favorable labor rate variance indicates that

the standard rate exceeds the actual rate.

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:

the standard variable overhead rate exceeded the actual rate.

If skilled workers with high hourly rates of pay are given duties that require little skill and call for lower hourly rates of pay, this will result in a favorable labor rate variance.

FALSE

In general, the production manager is responsible for the materials price variance.

FALSE

Waste on the production line will result in an unfavorable materials price variance.

FALSE

An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.

FALSE

A quantity standard indicates how much of an input should be used to make a unit of product or provide a unit of service.

TRUE

If the actual hourly rate is greater than the standard hourly rate, the labor rate variance is labeled unfavorable (U).

TRUE

The labor efficiency variance is labeled favorable (F) if the actual hours used is less than the standard hours allowed for the actual output.

TRUE


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