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What are the causes of a favourable raw material price variances?
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Explain the meaning and relevance of interdependence of variances when reporting to managers?
The cause of one (adverse) variance may be wholly or partly explained by the cause of another (favourable) variance.Material price or material usage and labour efficiencyLabour rate and material usageSales price and sales volume
How do you calculate material price variances and what are the possible reasons for such variances?
Following are the causes of material price variance: 1.There could have been recent changes in purchase price of materials. 2.Price variance can be due to substituting raw materials different from the original material specification. 3.Price variance can be attributed to the non availability of cash discounts which was originally anticipated at the time of setting the price standards. 4.Changes in transportation costs and storekeeping costs can also be contributing factors to material price variance.
Causes material usage variance?
may be material price is higher than the stander ed price
Why are separate price and quantity variances computed?
Price and quantity variances are computed respectively because different managers are usually responsible for buying and for using inputs.
What causes a DM Price Variance?
There are a number of reasons for causinf DM Price Variance. Adverse Price Variance 1) Demand > Supply (Low Supply, High Demand result in price to be material purchase to be more costly) 2) Change to a higher grade material quality. 3) Purchases made from oversea, exchange rate incurred 4) Purchases made in smaller quantity As for favourable DM price variance, explanation will be opposite of the above given.
What factors causes Budget Variance?
There are 7 variances associated with a budget ( which are generally calculated for controlling purposes) 1- Material Price variance 2- Material Quantity variance 3- Labor rate variance 4- Labor efficiency variance 5- Spending variance 6- Efficiency variance 7- Capacity variance
Are standards designed to evaluate price and quantity variances separately?
True
What causes an increase in market supply?
a decrease of price in the cost of raw material.
Why are variances generally segregated in terms of a price variance and an efficiency variance?
Efficiency Varian materials and direct labor, the variances were recorded in specific general ledger accounts.
List of causes of unfavorable direct material price variance?
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
When computing standard cost variances the difference between actual and standard price multiplied by actual quantity yields what?
Price Variance
What is cost price variances?
Price variance is the actual unit cost minus the standard unit cost, multiplied by the actual quantity purchased. The variance is said to be unfavorable if the actual price of the materials is higher than the standard price of the materials.
