The Derby Company Makes Tables for Which the Following Standards

question 106

Multiple Choice

The Derby Company makes tables for which the following standards have been developed: $$\begin{array} { l l l } & \text { Standard Inputs } & \text { Standard Price } \\& \text { Expected for E ach } & \text { Expected per } \\& \text { Unit of Output } & \text { Unit of Output } \\\text { Direct materials } & \text { 10 pounds } & \$ 4 \text { per pound } \\\text { Direct labor } & 3 \text { hours } & \$ 16 \text { per hour }\end{array}$$ Production of 200 tables was expected in June, but 220 tables were actually completed. Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound. Direct labor cost for the month was $10,620, and the actual pay per hour was $18.00. _ is the direct- labor usage variance for the month of June.

• A) $1,260 favorable
• B) $1,120 favorable
• C) $1,120 unfavorable
• D) None of these answers is correct.

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Definitions:

Rate Of Return

A measure of the profitability of an investment, calculated as a percentage of the original investment.

Net Value

The difference between the total benefits and total costs associated with an economic activity or transaction.

Long Run Deficit

A fiscal situation where a government consistently spends more than it earns over an extended period, leading to sustained budget deficits.