If Muskego Uses a Bankwide Rate Based on Direct Labor

question 10

Multiple Choice

If Muskego uses a bankwide rate based on direct labor hours,what would be the indirect costs allocated to the Consumer Department?

• A)$100,000
• B)$150,000
• C)$250,000
• D)$350,000

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Definitions:

Direct Materials Price Variance

The difference between the actual cost of direct materials used in production and the standard cost, multiplied by the actual quantity of materials used.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, used in variance analysis to control labor costs.

Direct Materials Cost Variance

The difference between the budgeted cost of materials for products and the actual cost incurred.

Direct Labor Rate Variance

The difference between the actual cost of labor per hour and the standard or expected cost, multiplied by the total labor hours worked.