Variances

Question 1

what are the three possible reasons for materials price variance

Answer 1

change of supplier
unexpected change in price of materials
change in the value of the pound affecting the cost on imported goods

Question 2

what are the two possible reasons for material usage variance

Answer 2

quality of the materials or equipment affected the amount used

Question 3

what are the two possible labour rate variances

Answer 3

the availability of skilled or unskilled workers affected the rate of pay
an unexpected pay rise

Question 4

two reasons for labour efficiency variance

Answer 4

the level of skill of the workers

quality of the materials or equipment

Question 5

three reasons for sales volume variance

Answer 5

a change in the selling price
internal factors like advertising or quality of goods
external factors like quality or competition

Question 6

two reasons for sales price variance

Answer 6

a change in the cost of production caused the selling price to be higher or lower than expected
a change in competitors prices

Question 7

what is the top three rows of a profit reconciliation statement before variances

Answer 7

budgeted profit
lost contribution due to a lower level of sales
budgeted profit on actual level of sales