The Budget for the Month of May Was for 9,000

question 70

Multiple Choice

The budget for the month of May was for 9,000 units at a direct materials cost of $15 per unit. Direct labor was budgeted at 45 minutes per unit for a total of $81,000. Actual output for the month was 8,500 units with $127,500 in direct materials and $77,775 in direct labor expense. The direct labor standard of 45 minutes was obtained throughout the month. Variance analysis of the performance for the month of May would show a(n) : (CMA adapted)

• A) favorable materials efficiency (quantity) variance of $7,500.
• B) favorable direct labor efficiency variance of $1,275.
• C) unfavorable direct labor efficiency variance of $1,275.
• D) unfavorable direct labor price (rate) variance of $1,275.

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Definitions:

Fundamental Attribution Error

A cognitive bias where individuals attribute others' actions to their character rather than external factors.

Spillover Effect

The influence of an event or behavior in one context spreading into another area, often unintentionally.

Work Stress

The physical and emotional strain experienced as a result of job demands, often characterized by tension, anxiety, or fatigue.

Psychological Contract

The unwritten, perceived obligations, and expectations between an employer and employees regarding the nature of their working relationship.