Budget Variance Analysis

Question 1

A favorable labor efficiency variance indicates

Answer 1

that workers are performing more efficiently than expected

Question 2

What could contribute to higher sales that budgeted

Answer 2

Higher sales prices than in the budget

Higher production volume than in the budget

A shift in product mix to one more favorable than that budgeted

Question 3

who has control over the price of direct materials

Answer 3

purchasing manager

Question 4

Direct Labor efficiency

Answer 4

is controllable by the production line manager

Question 5

What is not controllable by a production line manager

Answer 5

Fixed manufacturing volume variance

Question 6

A favorable materials price variance and an unfavorable labor efficiency variance

Answer 6

may indicate cheaper materials that are more difficult for workers to use

Question 7

An unfavorable materials efficiency variance and a favorable labor price variance may indicate that

Answer 7

less experienced workers are being employed by the firm

Question 8

An overall favorable labor variance conclusively indicates that

Answer 8

1) workers are performing more efficiently than expected or

2) favorable variance in labor price

Question 9

If a significant unfavorable materials efficiency variance is nearly offset by a favorable materials price variance

Answer 9

then the reasons for each variance should still be determined