Reference: 11-05
the Dexon Company Makes and Sells a Single

question 99

Multiple Choice

Reference: 11-05
The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: $$\begin{array} { | l | l | l | } \hline & \text { Standard Quantity of Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct materials } & 6 \text { board metres } & \$ 9.00 \\\hline \text { Direct labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$$ There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board metres at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $20,060.
-If the actual labour hours worked exceed the standard labour hours allowed, what type of variance will occur?

• A)Unfavourable labour rate variance.
• B)Favourable labour rate variance.
• C)Unfavourable labour efficiency variance.
• D)Favourable labour efficiency variance.

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Definitions:

Knowledge Workers

Individuals whose jobs primarily involve processing, analyzing, and manipulating information as opposed to manual labor.

Global Economy

The interconnectedness of national economies around the world, facilitating international trade, investment, and economic policy-making.

Knowledge-driven

Knowledge-driven pertains to actions, processes, or decisions that are primarily influenced by data, information, and insights to improve efficiency and outcomes.

Fee-for-services

A payment model where services are unbundled and paid for separately, often used in healthcare to charge for individual care activities.