The Luke Company Makes Tables for Which the Following Standards

question 14

Multiple Choice

The Luke Company makes tables for which the following standards have been developed: $\begin{array}{cc}&\text { Standard Inputs } & \text { Standard Frice } \\&\text { Expected for Each } & \text { Expected per } \\&\text { Unit of Output } & \text { Unit of Output }\\\hline\text { Direct materials } & 17 \text { pounds } & \$ 5.20 \text { per pound } \\\text { Direct labor } & 3 \text { hours } & \$ 16 \text { per hour }\end{array}$ Production of 200 tables was expected in May, but 220 tables were actually completed. Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound.Direct-labor cost for the month was $10,620, and the actual pay per hour was $18.00._____ is the direct-labor price variance for the month of May.

• A)$1,180 unfavorable
• B)$1,180 favorable
• C)$1,200 unfavorable
• D)$1,200 favorable

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Definitions:

Owner's Equity

The residual interest in the assets of a company after deducting liabilities, representing the owners' share of the company’s assets.

Owner's Investments

Funds or assets contributed by the owner(s) to the business to increase its capital.

Expenses

Costs incurred by a business in the process of earning revenue, such as rent, salaries, and utility bills.

Withdrawals

Amounts of money taken out from a bank account, investment fund, or retirement plan, often referring to the owner's use of funds for personal use.