Question

A labor efficiency variance resulting from the use of poor quality materials should be charged to:...

A labor efficiency variance resulting from the use of poor quality materials should be charged to:

a.

the production manager.
b.

the purchasing agent.
c.

manufacturing overhead.
d.

the industrial engineering department.
Business   Accounting   
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Homework Answers

Answer #1

Formula:-

Labour Efficiency variance = ( Actual hours - Standard hours) X Standard rate

If the labour efficiency variance is negative it is called as Unfavourable labour efficiency variance.

In general, the production department should be held responisble and charged for the unfavourable labour efficiency variance. But the unfavourable labour efficency is caused due to use of poor quality of material, then it shall be charged to the purchasing department. So, in the given problem labour efficiency variance resulting from the use of poor quality materials should be charged to " The purchasing agent" .

Answer:- b. the purchasing agent.

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