Aztec Bromac Budgeted the Following Cost Standards for the Current

question 113

Multiple Choice

Aztec Bromac budgeted the following cost standards for the current year: Direct materials = 2.8 kilos per unit @ $3.00 per kilo
Direct labour = 1.5 hours per unit @ $6 per hour
Actual production and costs were as follows:
Units produced = 3,600
Direct materials used = 9,000 kg.
Direct materials purchased = 10,000 kg. @ a cost of $29,000
Direct labour incurred = 4,000 hours at a cost of $26,000
The labour price variance was:

• A) $600 F
• B) $6,400 U
• C) $2,000 F
• D) $2,000 U

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Definitions:

Inflation

The rate at which the widespread price level of goods and services rises, impairing the purchasing power.

Taxes

Mandatory financial charges or levies imposed by a government on individuals, corporations, or other entities to finance government spending and various public expenditures.

Government Spending

Government spending includes all expenditures by government bodies and institutions, ranging from infrastructure investment to public services and welfare benefits.

Reserve Ratio

This is the fraction of deposits that banks must hold in reserve and not lend out, as stipulated by central banking authorities.