Consider the Flexible Budget Information Relating to Direct Labor Costs

question 11

Multiple Choice

Consider the flexible budget information relating to direct labor costs for Logan Ltd.: Logan's actual production was 51,000 units and the related cost was $205,500. What is the variance related to direct labor?

• A)$1,500 unfavorable
• B)$5,500 unfavorable
• C)$2,500 favorable
• D)$1,500 favorable

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Definitions:

Control Over Inventory

The process of managing and regulating the supply, storage, and accessibility of inventory to ensure sufficient quantities without excessive surplus.

Periodic Inventory System

The inventory system in which the inventory records do not show the amount available for sale or sold during the period.

Merchandise Inventory Account

An account that tracks the cost of goods held for sale during an accounting period.

Inventory Costing Methods

Refer to the approaches used by companies to assign costs to their inventory items and determine the cost of goods sold.