When managers investigate a direct labor efficiency variance, they are trying to:
A. Place blame on the person responsible for the variance.
B. Understand why workers took a longer or shorter amount of time than expected to produce a product.
C. Find out which workers were paid more than the standard rate.
D. All of these answer choices are correct.
(Answer D is NOT Correct)
Solution:
When managers investigate a direct labor efficiency variance, they are trying to "Understand why workers took a longer or shorter amount of time than expected to produce a product."
Hence option B is correct.
When managers investigate a direct labor efficiency variance, they are trying to: A. Place blame on...
The direct labor efficiency variance is caused by A. Lack of efficiency in preparing the budget. B. Using more or less direct labor than the standard allows. C. Setting a higher or lower wage standard than is practical. D. Paying more or less for direct materials than the standard allows. Assembly line workers at Thompson Manufacturing worked a total of 12,000 direct labor hours to produce 36,000 units. The standard for producing one unit is 15 minutes at a wage...
1.Which of the following is true about "management by exception"? It requires managers to investigate all favorable and unfavorable variances. It requires the use of variance analysis. It rarely requires the use of variance analysis. It requires managers to calculate standard costs, but ignore actual costs. None of the answer choices is correct. 2.Which of the following is most likely to cause an unfavorable direct materials quantity variance? Low quality materials increased waste of materials. High quality materials reduced waste...
Calculating the Direct Labor Rate Variance and the Direct Labor Efficiency Variance Guillermo's Oil and Lube Company is a service company that offers oil changes and lubrication for automobiles and light trucks. On average, Guillermo has found that a typical oil change takes 24 minutes and 6.2 quarts of oil are used. In June, Guillermo's Oil and Lube had 950 oil changes. Guillermo's Oil and Lube Company provided the following information for the production of oil changes during the month...
Compute the direct labor rate variance and the direct labor
efficiency variance. Indicate whether each variance is favorable or
unfavorable.
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Javonte Co. set standards of 3 hours of direct labor per unit of
product and $16.60 per hour for the labor rate. During October, the
company uses 21,000 hours of direct labor at a $352,800 total cost
to produce 7,200 units of product. In November, the company uses
25,000 hours of direct labor at a $421,250 total cost to produce
7,600 units of product.
AH = Actual Hours
SH = Standard Hours
AR = Actual Rate
SR = Standard Rate...