Ally Mfg Uses a Standard Cost System and Its July Production

question 11

Multiple Choice

Ally Mfg. uses a standard cost system and its July production of 1,800 units involved actual direct labor costs of $242,000 for 5,500 hours worked (AQ) . The budget for July called for production of 2,000 units with 6,000 direct labor hours at $40.00 per hour (SP) .

Ally's direct labor efficiency variance for July, to the nearest dollar, was:

• A) $2,000 unfavorable.
• B) $4,000 unfavorable.
• C) $20,000 favorable.
• D) $22,000 unfavorable.
• E) $26,000 unfavorable.

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Definitions:

Preparedness

The state of being readily equipped or mentally ready to handle situations or to undertake specific tasks.

Response Acquisition

The process through which new behaviors are learned or acquired, often discussed in the context of conditioning in psychology.

Diathesis-Stress Model

A psychological theory that explains behavior as a predispositional vulnerability together with stress from life experiences.

Operant Conditioning

A training approach in which behavior intensity is changed through rewards or discouragements.