Which of the following equations measures the direct labor rate variance?

a. (SR * AH) – (SR * SH)
b. (AR * SH) – (SR * AH)
c. (AR * AH) – (SR * AH)
d. none of the above

ANS:  C                 

   42.   Direct labor variances:

a. are largely determined by external forces such as labor markets and union contracts
b. occur because an highly paid laborers are used for less skilled tasks
c. that result from usage of labor are decisions usually controllable by the production managers
d. all of the above are correct

ANS:  D                   

   43.   An unexpected (not in the standard) five-percent wage increase for all factory employees would affect which of the following variances?

a. direct materials price variance
b. direct labor rate variance
c. direct labor efficiency variance
d. variable manufacturing overhead efficiency variance

ANS:  B               

   44.   Which is NOT an acceptable method of disposing of variances?

a. closing them to cost of goods sold
b. closing them to raw materials, work-in-process, and finished goods
c. closing them to work-in-process, finished goods, and cost of goods sold
d. all are acceptable methods

ANS:    B

Leave a Comment