Answer:
Possible causes of material quantity variance:
1. The use of sub-standard material
2. The use of unskilled labour
3. Wastage of material
Explanation:
Material quantity variance is the difference between standard quantity and actual quantity used multiplied by standard price. The use of sub-standard material reduces the quality of output thereby resulting to unfavorable material quantity variance. The use of unskilled labour also leads to unfavorable material quantity variance. Wastage of material due to low quality of inputs also results to unfavorable material quantity variance.
Answer:
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Answer:
1. Damaged or obsolete goods are not counted in inventory if they cannot be sold.
2. If these can be sold… Cost should be reduced to Net Realizable Value
Explanation:
The law relating to the valuation of inventory is that ''inventory should be valued at lower of 'Cost' and 'Net Realizable Value'.
Therefore in the case of damaged or obsolete goods, they have to be eliminated from inventory, otherwise it will lead to overvaluation.
However in the case where these can be sold, They have to be valued at lower of 'cost' or 'salable value', implying that 'Cost' should be reduced to 'Net Realizable Value'
