Decena Corporation Manufactures One Product

question 180

Multiple Choice

Decena Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. Information concerning the direct labor standards for the company's only product is as follows: During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 15,830 hours at an average cost of $18.50 per hour. The company calculated the following direct labor variances for the year:
Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.
When the direct labor cost is recorded, which of the following entries will be made?

• A) ($7,915) in the Labor Efficiency Variance column
• B) $7,915 in the Labor Rate Variance column
• C) $7,915 in the Labor Efficiency Variance column
• D) ($7,915) in the Labor Rate Variance column

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Definitions:

Management By Exception

A management strategy where leaders only intervene when performance deviates from standards, allowing employees to work autonomously otherwise.

Charismatic Leaders

Individuals who possess a magnetic personality and the ability to inspire and motivate others through their vision, communication skills, and personal charisma.

Self-esteem Followers

Individuals who follow others based on a need for approval and validation to boost their own self-esteem.

LMX

Leader-Member Exchange, a theory that focuses on the relationships between leaders and individual team members.