Aztec Inc'S Standard Labor Cost of Producing One Unit of Product

question 84

Essay

Aztec Inc.'s standard labor cost of producing one unit of product is 2 hours at the rate of $14.00 per hour. During February 52000 hours of labor are incurred at a cost of $13.80 per hour to produce 25000 units of product.
Instructions
(a) Compute the labor price and labor quantity variances.
(b) Journalize the incurrence of the labor costs and the assignment of direct labor to production assuming a standard cost system is used.

Recognize the relationship between wage rates, productivity, and employment levels in a competitive labor market.

Describe how shifts in marginal cost and marginal revenue product curves affect firm behavior in both product and labor markets.

Understand the law of diminishing marginal returns and its implications for the marginal revenue product schedule.

Evaluate how changes in technology and labor supply affect the marginal revenue product of labor and the firm's hiring decisions.

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Definitions:

Independent Events

Two events that have no influence on each other's occurrence, meaning the probability of one does not affect the other.

P(A And B)

The probability that events A and B both occur, which can be calculated directly or via the multiplication rule for independent events.

P(B|A)

The likelihood of event B happening after event A has already taken place.

Complement

The set or amount that completes something to a whole, usually in the context of sets in mathematics or the complement rule in probability.