What Effect Will This Adjustment Have on the Accounting Records

question 94

Multiple Choice

What effect will this adjustment have on the accounting records?

• A)increase net income
• B)increase revenues reported for the period
• C)decrease liabilities
• D)all of these are true

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Definitions:

Materials Quantity Variance

The difference between the expected quantity of materials needed for production and the actual quantity used, valued at standard cost.

Labour Rate Variance

The difference between the actual cost of labor and the expected (standard) cost, indicating efficiency in labor utilization.

Variable Overhead Efficiency Variance

The difference between the actual hours worked to produce an item and the standard hours expected, multiplied by the variable overhead rate.

Direct Labour Efficiency Variance

The difference between the expected hours to produce a specific number of units and the actual hours used.