Multiple Choice Questions:

1) The production manager of a company was experiencing a high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to purchase a higher grade of material that would be more reliable, but he was worried that the cost of the new material might negatively affect operating income. This situation would have produced a (n):

A) Favorable direct materials cost variance.

B) Unfavorable direct labor cost variance.

C) Unfavorable direct labor efficiency variance.

D) Favorable direct materials efficiency variance.

2) The production manager of a company was experiencing a high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to recruit some highly skilled production workers from another company to bring down the defect rate, but was worried that the higher wages of these workers might negatively affect operating income. This situation would have produced a (n):

A) Unfavorable direct materials cost variance.

B) Unfavorable direct labor cost variance.

C) Unfavorable direct labor efficiency variance.

D) Unfavorable direct materials efficiency variance.

3) The production manager of a company was experiencing a high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to recruit some highly skilled production workers from another company to bring down the defect rate, but was worried that the higher wages of these workers might negatively affect operating income. This situation would have produced a (n):

A) Unfavorable direct materials cost variance.

B) Favorable direct labor cost variance.

C) Favorable direct labor efficiency variance.

D) Unfavorable direct materials efficiency variance.

4) A company was experiencing slow production rates, and lower production volumes than demanded by management, so a new factory manager was hired. Upon investigation, she found that the workers were poorly motivated and not closely supervised. Midway through the quarter, she started an incentive program and paid out cash bonuses when workers hit their production targets. Within a short time, production output increased, but the bonuses had to be charged to the direct labor budget, and she was worried about the impact of these costs on operating income. This situation would have produced a (n):

A) Unfavorable direct materials cost variance.

B) Unfavorable direct materials efficiency variance.

C) Unfavorable direct labor efficiency variance.

D) Unfavorable direct labor cost variance.

5) A company was experiencing slow production rates, and lower production volumes than demanded by management, so a new factory manager was hired. Upon investigation, she found that the workers were poorly motivated and not closely supervised. Midway through the quarter, she started an incentive program and paid out cash bonuses when workers hit their production targets. Within a short time, production output increased, but the bonuses had to be charged to the direct labor budget, and she was worried about the impact of these costs on operating income. This situation could have produced a (n):

A) Unfavorable direct materials cost variance.

B) Unfavorable direct materials efficiency variance.

C) Favorable direct labor efficiency variance.

D) Favorable direct labor cost variance.

Answer rating: 100% (QA)

1 D Favorable direct materials efficiency vari... View the full answer