Reference: 11-13
the Upton Company Employs a Standard Costing System

question 94

Multiple Choice

Reference: 11-13
The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following:
Variable manufacturing overhead cost incurred: $48,700
Total variable overhead variance: $300 F
Standard hours allowed for actual production: 7,000
Actual direct labour hours worked: 6,840
-For the month of April, Thorp Co.'s records disclosed the following data relating to direct labour: $$\begin{array} { | l | l | l | } \hline \text { Actual cost } & \$ 10,000 & \\\hline \text { Rate variance } & \$ 1,000 & \text { favourable } \\\hline \text { Efficiency variance } & \$ 1,500 & \text { unfavourable } \\\hline\end{array}$$ For the month of April, actual direct labour hours amounted to 2,000. In April, Thorp's standard direct labour rate per hour was:

• A)$4.50.
• B)$5.50.
• C)$4.75.
• D)$5.00.

Analyze the relationship between a worker's wage and their marginal product within a competitive factor market.

Identify instances and rationalize why wage disparities occur according to the marginal productivity theory.

Interpret the implications of diminishing returns on the distribution of income among workers.

Recognize varying interpretations and critiques of the marginal productivity theory of income distribution.

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