Standard costing and variance analysis
. Below is a list of possible factors causing changes in expenses. Which of these possible factors will explain the direct labour rate and efficiency variances? Once you have identified the factors explaining the direct labour rate and efficiency variances, state whether each factor is most likely to explain either the direct labour rate variance or the direct labour efficiency variance or whether a factor could explain both variances.
- Employees have been awarded an hourly pay rise since the standard was last revised.
- Fixed overheads were lower than expected.
- Cheaper materials have led to greater wastage.
- Employees are making more products in less time.
- Materials purchased in bulk have reduced the unit cost of materials to the business.
- Employee productivity bonuses have been paid.
- The price of variable overheads has increased.
- Workers are not working as quickly as the standard says they should.
- Machinery breakdowns have led to unproductive time for employees for which they were still paid.
- Sales prices have risen.
When you have considered how you would answer the question select Yes to view the correct answer.