Machine Builders Inc

question 32

Multiple Choice

Machine Builders Inc.adopted a standard cost system several years ago that it uses in conjunction with its process cost system.The per-unit standard costs for direct materials and direct labor for its single product are as follows: Materials: 4 kilograms/unit x $10.00 per kilogram = $40.00/unit;labor: 4 hours/unit x $18.00 per hour = $72.00/unit.All materials are issued at the beginning of processing.The operating data shown below were taken from the records for July:
The direct labor rate variance for July is:

• A)$6,600 favorable.
• B)$16,600 favorable.
• C)$21,000 unfavorable.
• D)$57,600 unfavorable.
• E)$58,200 unfavorable.

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Definitions:

Operating Capacity

The maximum amount of work that an organization can complete in a given period under normal circumstances.

Sales

The total amount of goods or services sold by a company during a specific period, often seen as a critical measure of business performance.

External Financing

External financing encompasses funds raised by a business from outside sources, such as loans, bonds, or equity financing, as opposed to internal sources like retained earnings.

Sales Capacity

The maximum volume or number of sales that a company can achieve within a specific period, considering its resources and constraints.