A favorable direct materials efficiency variance indicates that you are using less material in production than was budgeted for.
A favorable direct materials price variance may be the result of the purchase of cheaper materials that may be of inferior quality, thereby causing an inferior product. An inferior quality can also cause more spoilage and waste.
A favorable/unfavorable price variance does not effect your quantity variance. The reason you would see a favorable price variance and an unfavorable quantity variance is because you consumed more materials than your standard allows AND the price you paid for those material was less than your standard price. If you paid more than your standard price, you would have experienced an unfavorable variance in both quantity and price.
a debit balance in the labor efficiency variance account indicates that actual rate and actual hours exceed standard rates and standard hours
In cost accounting, a variance is the difference between what we expected to happen (what we planned for when we created the budget) and what actually happened. If we produce more units from a given quantity of raw material than we expected to produce when we set up the budget, we have a favorable materials quantity variance, because we produced the goods more efficiently than we had planned for. We have used the raw materials with less waste than expected.
the production manager
A favorable direct materials price variance may be the result of the purchase of cheaper materials that may be of inferior quality, thereby causing an inferior product. An inferior quality can also cause more spoilage and waste.
Efficiency Varian materials and direct labor, the variances were recorded in specific general ledger accounts.
A favorable/unfavorable price variance does not effect your quantity variance. The reason you would see a favorable price variance and an unfavorable quantity variance is because you consumed more materials than your standard allows AND the price you paid for those material was less than your standard price. If you paid more than your standard price, you would have experienced an unfavorable variance in both quantity and price.
a debit balance in the labor efficiency variance account indicates that actual rate and actual hours exceed standard rates and standard hours
In cost accounting, a variance is the difference between what we expected to happen (what we planned for when we created the budget) and what actually happened. If we produce more units from a given quantity of raw material than we expected to produce when we set up the budget, we have a favorable materials quantity variance, because we produced the goods more efficiently than we had planned for. We have used the raw materials with less waste than expected.
the production manager
a
A favorable variance is the difference between the budgeted or standard cost and the actual cost. If the actual cost is less than budgeted or standard cost, it is a favorable variance.
The price variance might result from use of cheaper but inferior quality materials hence though it will be cheaper , the final product will be compromised .
Favourable variance is that variance which is good for business while unfavourable variance is bad for business
false- it is best to isolate them once you know how much of the material has been used. If you don't know how much is used, you can't get a variance to evaluate efficiency of how materials were used.
efficiency variance, spending variance, production volume variance, variable and fixed components