If a Company Uses More Direct Labor Hours Than the Standard

question 44

Multiple Choice

If a company uses more direct labor hours than the standard allowed, the result is

• A)an inflated Wages and Salaries Payable account on the balance sheet.
• B)an unfavorable direct labor hour variance.
• C)a favorable efficiency variance.
• D)a reduction in operating income.

---

Definitions:

Average Sale Period

The average time it takes for a company to sell its inventory, often used as an indicator of inventory management efficiency and demand for products.

Cost of Goods Sold

The total cost of manufacturing and delivering a product or service to consumers.

Inventory

The raw materials, work-in-process products, and finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Cost of Goods Sold

The costs directly associated with the manufacturing of goods a company sells, encompassing both the price of materials and the wages for labor.