Refer to the Table

question 91

Multiple Choice

$$\begin{array} { | c | c | c | c | c | } \hline \text { Year } & \text { Alta (Real GDP) } & \text { Zorn (Real GDP) } & \text { Alta (Population) } & \text { Zorn (Population) } \\\hline 1 & \$ 2,000 & \$ 150,000 & 200 & 500 \\\hline 2 & 2,100 & 152,000 & 202 & 505 \\\hline 3 & 2,200 & 154,000 & 210 & 508 \\\hline\end{array}$$ Refer to the table. Between years 2 and 3,

• A) Alta's real GDP grew more rapidly than Zorn's real GDP.
• B) real GDP fell in Zorn.
• C) population growth reduced Alta's real GDP growth to zero.
• D) population fell in Alta.

Compute direct materials price and quantity variances.

Understand the principle of standard costing and variance analysis.

Prepare journal entries for variances and standard costing adjustments.

Calculate total direct labor cost variances and identify variances as favorable or unfavorable.

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Definitions:

Direct Materials Cost

The expense associated with the raw materials directly used in the production of a product.

Cost Behavior Classifications

The categorization of costs based on how they change in relation to changes in a company’s level of activity or volume.

Activity Base

A measure upon which the allocation of costs is based in activity-based costing, often relating to a metric that causes costs to occur such as machine hours or labor hours.

Cost Behavior

The way in which costs change in relation to variations in an organization’s activity level.