EXERCISE 10-15 (CONTINUED) ALTERNATIVE SOLUTION

4. - SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH10 STANDARD COST AND THE BALANCE SCORECARD
4. For materials: Favorable price variance: Decrease in outside purchase price; fortunate buy; inferior quality materials; unusual discounts due to quantity pur-chased; less costly method of freight; inaccurate standards. Unfavorable quantity variance: Inferior quality materials; carelessness; poorly adjusted machines; unskilled workers; inaccurate standards. For labor: Favorable rate variance: Unskilled workers (paid lower rates); piece-work; inaccurate standards. Unfavorable efficiency variance: Poorly trained workers; poor quality materials; faulty equipment; work interruptions; fixed labor and insuf-ficient demand to fill capacity; inaccurate standards. For variable overhead: Favorable spending variance: Decrease in supplier prices; less usage of lubricants or indirect materials than planned; inaccurate standards. Unfavorable efficiency variance: See comments under direct labor effi-ciency variance above.