Q1. Which of the following is the most probable reason a company would experience an unfavorable labor rate varience and a favorable labor efficiency varience.

A. The mix of workers assigned to the particular job was heavily weighed towards the use of higher paid experienced individuals

B. The mix of workers assigned to the particular job was heavily weighed towards the use of new relatively low paid unskilled workers

C. Because of the production schedule, workers from other production areas were assigned to assist this particular process

D. Defective materials caused more labor to be used in order to produce a standard unit

Q2. Which of the following statements is (are) true?

1. If variences are prorated at the end of the accounting period, an unfavorable direct materials price varience will, when prorated, increase the value of the Finished Goods Inventory

2. Insignificant variences are not generally prorated at the end of the accounting period and are closed to the Cost of Goods sold

A. 1

B. 2

C. Both

D. Neither