Page 282 - P1 Integrated Workbook STUDENT 2018

Subject P1: Management Accounting

3.8 Which of the following would not normally lead to a planning variance?

A A legal change to working methods that alters the time taken to produce a
product

B An increase in the price of materials due to a rapid increase in world
market prices (e.g. the price of oil or other commodities)

C A change in supplier causing a change to material prices

D An incorrect standard cost card compiled by the firm’s accountant

3.9 An organisation wants to determine variances on a particular contract. The
contract should have had 20 hours of labour split equally between skilled and
unskilled labour. Skilled labour is paid $80 per hour and unskilled labour is paid
$20 per hour.

20 hours of labour were actually worked on the project but only 40% of it was
performed by unskilled labour.

Using the weighted average valuation method, what is the labour mix
variance for unskilled labour on the project?

A $40 adverse

B $60 adverse

C $40 favourable

D $60 favourable

3.10 Which of the following would normally lead to a favourable sales mix
variance?

A An organisation sold more products overall than expected

B An organisation sold less products overall than expected

C An organisation sold a greater proportion of its least profitable product
than expected

D An organisation sold a lesser proportion of its least profitable product than
expected

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