1.rise in price. if price will be higher than the budgeted price then unfavourable
2.shortage of suppliers. this led to increase in price
what are some of the causes of material quntity variance of favourable amount
Some causes of direct material quantity variance are poor quality materials, untrained workers, and lack of supervision. Production managers should look at and determine the causes.
An unfavorable materials quantity variance means excessive use of direct materials. The excessive use of direct materials may be the result of a number of reasons including: inexperienced or untrained workers, lack of motivation, lack of proper supervision, use of outdated machinery, faulty equipment, purchase of unsuitable or substandard materials, and frequent power failures.
Unfavorrable direct labor price variance indicates that business has incurred more direct labor cost for production of units of product then standard labor cost. For example if standard cost of direct labor for producing 1 unit is 10 and company incurred 105 for making 10 units then extra 5 is unfavorable direct labor cost variance.
Direct labor rate variance is caused by a change in the hourly rate from what you initially planned.
what are some of the causes of material quntity variance of favourable amount
Since actual usage of the direct material was greater than the standard allowed, the excess usage is called an unfavorable variance
Some causes of direct material quantity variance are poor quality materials, untrained workers, and lack of supervision. Production managers should look at and determine the causes.
An unfavorable materials quantity variance means excessive use of direct materials. The excessive use of direct materials may be the result of a number of reasons including: inexperienced or untrained workers, lack of motivation, lack of proper supervision, use of outdated machinery, faulty equipment, purchase of unsuitable or substandard materials, and frequent power failures.
Unfavorrable direct labor price variance indicates that business has incurred more direct labor cost for production of units of product then standard labor cost. For example if standard cost of direct labor for producing 1 unit is 10 and company incurred 105 for making 10 units then extra 5 is unfavorable direct labor cost variance.
Direct labor rate variance is caused by a change in the hourly rate from what you initially planned.
A favorable direct materials efficiency variance indicates that you are using less material in production than was budgeted for.
No, Direct labor price variance is created due to difference in standard labor rate and actual labor rate for example standard labor rate per unit is 10 and actual labor rate is 11 then 1 per unit is unfavourable direct labor price variance.
The material cost variance denoting the difference between the standard cost of materials and actual cost of matrials. The material cost variance is between the standard material cost for actual production in units and actual cost. The total cost is usually determined by two differenct factors of influence viz quantity of materials utilized/ required and price of the materials. The fluctuations in the material cost are only due to the fluctuations in the utility of materials due to many factors. Material cost variance can be computed into two different ways: DIRECT METHOD AND INDIRECT METHOD material cost variance= Standard cost of materials for actual output- actual cost of raw materials. MCV=(S Q AO X SP)-(AQ X AP) Indirect Method: material cost variance= Material price variance (MPV)+Material usage Variance
Changes in quality of inputs from manufacturer.
1) semi-skilled worker performing skilled work 2) inferior raw materials 3) poor process scheduling
If poor quality materials are used it may cause insufficient demand for the products. Insufficient demand may not keep workers busy. If the workers are not being laid off, and unfavorable labor efficiency variance will often be recorded.