A standard is a benchmark or norm for evaluating performance. Manufacturing companies commonly set exacting

standards for materials, labor and overhead for each product. Standards are set for both quantity and price of inputs

$($how much we are supposed used and how much we are supposed to spend$).$ Actual quantities and prices of inputs

are compared to standards. The differences are called variances. We have six variances to learn in this chapter:

DM price variance & DM quantity variance

DL rate variance & DL efficiency variance

VMOH rate variance & VMOH efficiency variance

Once you have read the chapter and worked through the homework $-$ answer the following questions:

Will waste on the production line result in a materials price variance?

Are labor rate variances out of management's control?

If your employees take longer to complete a job than expected will you have an unfavorable labor rate variance?

Should management investigate ALL variances?