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.

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Definitions:

Net Advantage to Leasing

The total financial benefit that a business might achieve from leasing assets rather than purchasing them, considering all costs and savings.

Purchase Price

This is the amount of money paid to buy a good, service, or financial asset.

Straight-Line Depreciation

A strategy for spreading out the expenditure of a tangible asset over the duration of its usefulness in uniform annual amounts.

Break-Even Lease Payment

The lease payment amount at which the cost of leasing equals the cost of purchasing the asset.