ACC 604 ACC604 Chapter 11 Homework Answers (National University)

ACC 604 ACC/604 ACC604 Homework Chapter 11 Solutions (National University)

Chapter 11

1. What is a quantity standard? What is a price standard?

2. Distinguish between ideal and practical standards.

3. What is meant by the term management by exception?

4. Why are separate price and quantity variances computed?

5. Who is generally responsible for the materials price variance? The materials quantity variance? The labor efficiency variance?

6. The materials price variance can be computed at what two different points in time? Which point is better? Why?

7. If the materials price variance is favorable but the materials quantity variance is unfavorable, what might this indicate?

8. Should standards be used to identify who to blame for problems?

9. “Our workers are all under labor contracts; therefore, our labor rate variance is bound to be zero.” Discuss.

10. What effect, if any, would you expect poor-quality materials to have on direct labor variances?

11. If variable manufacturing overhead is applied to production on the basis of direct labor hours and the direct labor efficiency variance is unfavorable, will the variable overhead efficiency variance be favorable or unfavorable, or could it be either? Explain.

12. What is a statistical control chart, and how is it used?

13. Why can undue emphasis on labor efficiency variances lead to excess work in process inventories?