Biscuit Company Has Developed the Following Standards for One of Its

question 88

Multiple Choice

Biscuit Company has developed the following standards for one of its products. Direct labor hours is the driver used to assign overhead costs to products. $\begin{array}{ll}\text { Direct materials: } & 10 \text { pounds } \times \$ 3 \text { per pound } \\\text { Direct labor: } & 2.5 \text { hours } \times \$ 8 \text { per hour } \\\text { Variable manufacturing overhead: } & 2.5 \text { hours } \times \$ 2 \text { per hour }\end{array}$

$\text { The following activity occurred during the month of June: }$

$\begin{array}{ll}\text { Materials purchased: } & 125,000 \text { pounds at } \$ 2.60 \text { per pound } \\\text { Materials used: } & 110,000 \text { pounds } \\\text { Units produced: } & 10,000 \text { units } \\\text { Direct labor: } & 24,000 \text { hours at } \$ 7.50 \text { per hour } \\\text { Actual variable manufacturing overhead: } & \$ 51,000\end{array}$ The company records materials price variances at the time of purchase.
The direct labor rate variance is

• A)$12,000 favorable.
• B)$8,000 favorable.
• C)$12,000 unfavorable.
• D)$8,000 unfavorable.

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Definitions:

Partnership Agreement

A legal document outlining the terms of a business partnership, including the responsibilities, profit distribution, and rules for dissolution.

Duty of Obedience

In the context of corporate governance, it refers to the obligation of directors and officers to act in accordance with the organization's goals, policies, and rules.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another when managing money or property, such as the relationship between a trustee and the beneficiaries.

Tenants in Property

Individuals or entities who hold the right to occupy land or structures rented from a landlord under a lease.