The Following Data Relate to Direct Labor Costs for the Current

question 23

Multiple Choice

The following data relate to direct labor costs for the current period of Executive Inc.: $$\begin{array} { l l } \text { Standard costs } & 6,000 \text { hours at } \$ 12.00 \\\text { Actual costs } & 7,500 \text { hours at } \$ 11.60\end{array}$$ ? What is the direct labor time variance?

• A) $17,400 favorable
• B) $17,400 unfavorable
• C) $18,000 favorable
• D) $18,000 unfavorable

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Definitions:

Coefficient

A numerical or constant quantity placed before and multiplying the variable in an algebraic expression, often indicating proportionality.

Normal Good

A good for which demand increases as consumer income rises, and decreases as consumer income falls.

Income Elasticity

A rephrased definition: The responsiveness of demand for an item to changes in the income of the people demanding the item.

Inferior Good

A good or service whose consumption declines as income rises, prices held constant.