Reference: 11-13 The Upton Company Employs a Standard Costing System in Which

question 5

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
-Which of the following could result in a situation where the use of a standard cost system to control labour costs might not be the most useful?

• A)Standards are viewed by employees as reasonable.
• B)Manufacturing is highly automated.
• C)There is a desire to simplify the accounting for costs of items manufactured.
• D)The integration of costing with responsibility accounting.

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Definitions:

Increase Price

The action of raising the cost that consumers must pay to purchase a product or service.

Economic Profits

The result of subtracting a firm's entire costs, encompassing both tangible and intangible expenses, from its total revenue.

Nondiscriminating Monopolist

A monopolist who charges all consumers the same price for its product or service, unlike price discrimination strategies where different prices are set for different markets or consumers.

Economic Profit

The profit a firm makes after deducting both explicit and implicit costs, reflecting the total opportunity costs of all resources involved.