Efficient Corporation Uses a Standard Cost System ? the Direct Labor Time Variance Is:
A) $31,725 Favorable

question 89

Multiple Choice

Efficient Corporation uses a standard cost system.The following information was provided for the period that just ended: $\begin{array}{ll}\text { Actual price per gallon } & \$ 11.75 \\\text { Actual gallons of material used } & 5,000 \\\text { Actual hourly labor rate } & \$ 17.00 \\\text { Actual hours of production } & 24,300 \\\text { Standard price per gallon } & \$ 12.00 \\\text { Standard gallons per completed unit } & 1 / 2 \\\text { Standard hourly labor rate } & \$ 12.00 \\\text { Standard time per completed unit } & 3 \text { hrs. } \\\text { Units completed during the period } & 9,000\end{array}$ ? The direct labor time variance is:

• A) $31,725 favorable.
• B) $32,400 favorable.
• C) $89,100 unfavorable.
• D) $121,500 unfavorable.

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Definitions:

Wasteful Duplication

The unnecessary repetition of tasks or production, often leading to inefficiency and increased costs.

Excess Capacity

A situation where a firm is operating below its maximum production capability and can produce more with the existing resources.

Physical And Human Capital

Assets including machinery, buildings (physical capital) and the skills, knowledge, and experience possessed by an individual or population (human capital).

Excess Capacity

A situation where a firm is producing at a lower scale of output than it has been built to handle, due to insufficient demand.