Who is most likely to be held responsible for a material quantity variance?
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A usage variance can arise from any of the following issues: An incorrect standard against which actual usage is measured. Not changing the bill of materials after a production process or product design has been altered that should have resulted in a change in the amount of materials usage. Show
Contents What are the possible reasons for material usage variance?Causes for Direct Material Usage Variance.
What is meant by material usage variance?The material usage variance analyses the difference between how much actual material we used for our production relative to how much we expected to use, based on standard usage levels. Who is responsible for material usage variance?Materials Variances: Which of the following situations is likely to cause an adverse material usage variance?Reasons for adverse material usage variance include: Purchase of materials of lower quality than the standard (this will be reflected in a favorable material price variance). Use of unskilled labor. Increase in material wastage due to depreciation of plant and equipment. What are two possible causes of the direct materials quantity variance?What Causes a Direct Material Usage Variance
How do you explain usage variance?A usage variance is the difference between the expected number of units used in a process and the actual number used. If more units are used than expected, the difference is considered an unfavorable variance. If fewer units are used than expected, the difference is considered a favorable variance. Who is most likely to be held responsible for a material price variance?4. In general, the purchasing agent is responsible for the material price variance. How is material usage variance computed?The formula for calculating the material usage variance is: MUV = (Standard Quantity – Actual Quantity) x Standard Price. Who typically controls a materials price variance and who controls a materials quantity or usage variance?The materials price variance is usually the responsibility of the purchasing manager. The materials quantity and labor efficiency variances are usually the responsibility of production managers and supervisors. What causes unfavorable material quantity variance?A materials quantity variance compares the actual and expected direct material used in manufacturing a product. You have an unfavorable materials quantity variance when you use more material than expected. It’s favorable when you use less material than planned. What are some other factors that can lead to an unfavorable quantity variance?Causes of Unfavorable Variances Which would produce a materials price variance?The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased. A materials price variance is unfavorable if the actual price exceeds the standard price. Which manager is usually held responsible for materials usage variances?Correct option and explanation: Production supervisor is usually held responsible for materials usage variances. Which department is held responsible for an unfavorable materials usage variance?price variance. Which department should usually be held responsible for an unfavorable materials price variance? Purchasing. Which department is customarily held responsible for an unfavorable materials usage variance?price variance. Which department should usually be held responsible for an unfavorable materials price variance? Purchasing. Why is the direct materials usage variance allocated only to WIP inventory?Why is the direct materials usage variance allocated only to WIP Inventory, Finished Goods Inventory, and cost of goods sold (COGS)? It occurs after direct materials are issued to production. Among characteristics that distinguish service and manufacturing firms are the: Absence of output inventory in service firms. How do you allocate variance to inventory?If the variance is unfavorable, significant in amount, and results from the standard costs not being realistic, allocate the variance to the company’s inventory accounts and cost of goods sold. The allocation should be based on the location of the inputs from which the variances arose. How are variances disposed or resolved?(v) Disposition of variances: Variances arise are disposed-off by transferring it the relevant accounts (costing profit and loss account) as per the accounting method (plan) adopted. Standard cost is set on the basis of management’s estimation. Who is most likely to be responsible for material variance?2. Direct material cost compares the budgeted price for raw materials and the actual price paid. The purchasing manager will have control over the variance as he/she will be responsible for purchase of raw materials.
Who is responsible for variance in material price?The material yield variance is the difference between the standard and actual number of units used in the production process, multiplied by the standard cost per unit. This variance is the responsibility of the production department.
Who is responsible for variance?Management is responsible for evaluation of variances. This task is an important part of effective control of an organization. When total actual costs differ from total standard costs, management must perform a more penetrating analysis to determine the root cause of the variances.
Which manager is usually held responsible for materials usage variances?Correct option and explanation: Production supervisor is usually held responsible for materials usage variances.
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