The Management of Watchdog Security Systems Has Calculated the Following

question 16

Multiple Choice

The management of Watchdog Security Systems has calculated the following variances: $$\begin{array} { | l | r | } \hline \text { Direct materials cost variance } & \$ 8000 \mathrm { U } \\\hline \text { Direct materials efficiency variance } & 40,000 \mathrm {~F} \\\hline \text { Direct labor cost variance } & 15,000 \mathrm {~F} \\\hline \text { Direct labor efficiency variance } & 13,500 \mathrm { U } \\\hline \text { Total variable overhead variance } & 8500 \mathrm {~F} \\\hline \text { Total fixed overhead variance } & 3500 \mathrm {~F} \\\hline\end{array}$$ What is the total direct labor variance of the company?

• A) $15,000 F
• B) $12,000 F
• C) $28,500 F
• D) $1500 F

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Definitions:

Routine Entry

Regular, often daily, accounting entries that reflect standard business transactions.

Accrued

Describes expenses or revenues that have been incurred but not yet recorded through a payment or receipt, reflecting in accounts payable or receivable.

Deferred

Refers to items or transactions that have been postponed or delayed to a future date.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out, respectively.