Assume That the Standard Cost to Make One Finished Unit

question 92

Multiple Choice

Assume that the standard cost to make one finished unit includes two hours of direct labor at $8 per hour. During April, 22,000 direct labor hours were worked, 10,500 units of product were manufactured, and total direct labor cost was $170,000. What is the (approximate) labor efficiency variance for April?

• A) $8,095 unfavorable
• B) $8,000 unfavorable
• C) $8,000 favorable
• D) $8,095 favorable

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Definitions:

Direct Materials

Raw materials that are directly used in the production of goods, traceable to the end product.

Factory Overhead

All the indirect costs related to manufacturing, which are not directly tied to the production of goods, such as utilities and rent for the manufacturing facility.

Direct Labor

The labor costs directly associated with the production of goods or the provision of services, typically including wages paid to workers who physically manufacture products.

Manufacturing Costs

Expenses directly related to the production of goods, including materials, labor, and overhead.