Listed Below Are Five Variances (And Possible Causes) That Are

question 44

Multiple Choice

Listed below are five variances (and possible causes) that are under review by management of Knox Company. Which of the following is least likely to cause the variance indicated?

• A) The need to ship goods acquired from a distant supplier via FedEx rather than via truck; material price variance.
• B) The need to complete goods on a timely basis during a period of high absenteeism; labor rate variance.
• C) A work-team that is very unhappy with its supervisor; labor efficiency variance.
• D) The need to close a plant for two days because of blizzard conditions; material quantity variance, part no. 542.
• E) A malfunctioning piece of manufacturing equipment; labor efficiency variance.

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Definitions:

Issue of Shares

The process by which a company allocates new shares to shareholders, which can raise capital or dilute ownership depending on the circumstances.

Gain or Loss

The financial result from the sale of an asset or investment, calculated as the difference between the selling price and the original purchase price.

Equity Method

An accounting technique used when a company holds significant influence over another (associate) but does not have full control, requiring the investment to be recorded at original cost and subsequently adjusted for the investor’s share of the associate's profits or losses.

Sale

is the transaction between two parties where the ownership of goods, services, or assets is transferred from the seller to the buyer for a specified price.