Discussion: Standard Costs and Variances

1 SectionGS 202-MB1 MGT ACC & CNTRL

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Participate in the discussion considering the following questions:

1. Our workers are all under labor contracts, therefore, our labor rate variance is bound to be zero. What do you think?
2. What effect, if any, would you expect poor quality materials to have on direct labor variances?
3. If variable manufacturing overhead is applied to production on the basis of direct labor hours and the direct labor efficiency is unfavorable, will the variable overhead efficiency variance be favorable or unfavorable or could it be either?