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Determining the Reasons for Variances Is an Important Part of the Overall

Question 165

Matching

Determining the reasons for variances is an important part of the overall process of variance analysis. Certain causes are commonly attributed to specific variances. Match each reason with the variance(s)it commonly creates from the list. Each numbered item has one or more correct answer(s). Each lettered item may be used once, more than once, or not at all

Premises:
Unreasonable standard allocation
Outsourcing hourly equipment maintenance services
Poor cost estimates
Improved production processes
Errors in the accounting records
Change in amortization method for plant assets
Fluctuation in efficiency of the allocation base
Change in wage rates for indirect labour
Changes in normal spoilage
Responses:
Fixed overhead production volume variance
Does not usually cause an overhead variance
Variable overhead spending variance
Variable overhead efficiency variance
Fixed overhead spending variance

Correct Answer:

Unreasonable standard allocation
Outsourcing hourly equipment maintenance services
Poor cost estimates
Improved production processes
Errors in the accounting records
Change in amortization method for plant assets
Fluctuation in efficiency of the allocation base
Change in wage rates for indirect labour
Changes in normal spoilage
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