Reference: 11-03
the Albright Company Uses Standard Costing and Has

question 25

Multiple Choice

Reference: 11-03
The Albright Company uses standard costing and has established the following standards for its single product: $$\begin{array} { | l | l | } \hline \text { Direct materials } & 2 \text { litres at } \$ 3 \text { per litre } \\\hline \text { Direct labour } & 0.5 \text { hours at } \$ 8 \text { per hour } \\\hline \text { Variable manuf. overhead } & 0.5 \text { hours at } \$ 2 \text { per hour } \\\hline \begin{array} { l } \text { During November, the company made } 4,000 \text { units } \\\text { and incurred the following costs: }\end{array} & \\\hline \text { Direct materials purchased } & 8,100 \text { litres at } \$ 3.10 \\\hline & \text { per litre } \\\hline \text { Direct materials used } & 7,600 \text { litres } \\\hline \text { Direct labour used } & 2,200 \text { hours at } \$ 8.25 \text { per hour } \\\hline \text { Actual variable manuf. overhead } & \$ 4,175 \\\hline\end{array}$$ The company applies variable manufacturing overhead to products on the basis of direct labour hours.
-What does a credit balance in a direct labour efficiency variance account indicate

• A)The average wage rate paid to direct labour employees was less than the standard rate.
• B)Actual total direct labour costs incurred were less than standard direct labour costs allowed for the units produced.
• C)The standard hours allowed for the units produced were greater than actual direct labour hours used.
• D)The number of units produced was less than the number of units budgeted for the period.

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Definitions:

Logical Reasoning

The process of using a rational, systematic series of steps based on sound mathematical procedures and given statements to arrive at a conclusion.

Moral Reasoning

The process through which individuals make decisions about what is right and wrong based on personal, societal, and ethical criteria.

Mathematical Transformations

The process of changing variables or applying operations to alter the form of a mathematical equation or function without changing its essence.

Theory Of Mind

The capacity to recognize and assign mental states such as beliefs, intentions, desires, emotions, and knowledge to oneself and others, while grasping that others may hold beliefs, desires, and intentions distinct from our own.