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Labor Variance and Profitability Quiz

The document contains a series of multiple-choice questions related to labor variances, contribution margins, and margin of safety in a business context. Each question presents different scenarios requiring the selection of the best answer based on financial principles. The instructions emphasize the importance of marking only one answer and using specific materials for the test.

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novi bag-ay
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5 views1 page

Labor Variance and Profitability Quiz

The document contains a series of multiple-choice questions related to labor variances, contribution margins, and margin of safety in a business context. Each question presents different scenarios requiring the selection of the best answer based on financial principles. The instructions emphasize the importance of marking only one answer and using specific materials for the test.

Uploaded by

novi bag-ay
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Instructions: Choose the BEST answer for each of the following items.

Mark only one answer for


each item on the Special Answer Sheet provided. Strictly no erasure allowed. Use Pencil No. 1 only.

11. A company would most likely have an unfavorable labor rate variance and a favorable labor
efficiency variance if a. the mix of workers used in the production process was more experienced
than the normal mix. b. the mix of workers used in the production process was less experienced
than the normal mix. c. workers from another part of the plant were used due to an extra heavy
production schedule. d. the purchasing agent acquired very high quality material that resulted in
less spoilage.

12. In a multiple-product firm, the product that has the highest contribution margin per unit will a.
generate more profit for each ₱1 of sales than the other products. b. have the highest contribution
margin ratio. c. generate the most profit for each unit sold. d. have the lowest variable costs per
unit.

13. The margin of safety would be negative if a company('s) a. was presently operating at a volume
that is below the break-even point. b. present fixed costs were less than its contribution margin. c.
variable costs exceeded its fixed costs. d. degree of operating leverage is greater than 100

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