Questions:
1. The budget variance for variable production costs is broken down into quantity and price variances. Explain why the quantity variance is more useful for control purposes than the price variance.
2. Explain why the direct materials price variance is often computed at the point of purchase rather than at the point of issuance.
3. The direct materials usage variance is always the responsibility of the production supervisor. Do you agree or disagree? Why?
4. The direct labor rate variance is never controllable. Do you agree or disagree? Why?
5. Suggest some possible causes of an unfavorable direct labor efficiency variance.