The Following Data Relate to Direct Labor Costs for the Current

question 33

Multiple Choice

The following data relate to direct labor costs for the current period:Standard costs9,000 hours at $5.50Actual costs8,500 hours at $5.75What is the direct labor rate variance?

• A) $2,250 unfavorable
• B) $2,125 unfavorable
• C) $2,250 favorable
• D) $2,125 favorable

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Definitions:

Accounting Profit

The total revenue of a business minus the explicit costs, representing the financial gain in accounting terms.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the additional return over the investor's opportunity cost.

Implicit Costs

The opportunity costs of using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.

Explicit Costs

These are the direct, out-of-pocket payments made by businesses for operational expenses like wages, rent, and materials.