For numbers 1 to 9: A. Only Statement I is True C. Both Statements are True B. Only Statement II is True D. Both Statements are False

1. I. Purchase of poor quality materials will generally result in a favorable materials price variance and an unfavorable labor rate variance.

II. From a standpoint of cost control, the most effective time to recognize materials price variances is when the materials are placed into production.

2. I. The production manager is usually held responsible for the labor efficiency variance.

II. A favorable materials price variance coupled with an unfavorable material usage variance would most likely result from the purchase and use of higher than standard quality material.

3. I. Whoever is responsible for the control of the denominator activity in the predetermined overhead rate should also be responsible for the variable overhead efficiency variance.

II. An unfavorable materials quantity variance indicates that actual usage of material exceeds the standard material allowed for output.

4. I. The Legal Department of an organization is not considered a responsibility center because it does not generate revenue.

II. All other things the same, if a division's traceable fixed expenses decrease the division's segment margin will increase.