A Company Uses the Following Standard Costs to Produce a Single

question 137

Multiple Choice

A company uses the following standard costs to produce a single unit of output. $$\begin{array} { l l l l } \text { Direct materals } & 6 \text { pourds at } \$ 0.90 \text { per pound } & = & \$ 5.40 \\\text { Direct labor } & 0.5 \text { hour at } \$ 12.00 \text { per hour } & = & \$ 6.00 \\\text { Marufacturing overhead } & 0.5 \text { hour at } \$ 4.80 \text { per hour } & = &\$ 2.40\end{array}$$ During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400.Based on this information,the direct labor rate variance for the month was:

• A)$1,200 favorable
• B)$3,650 favorable
• C)$2,450 favorable
• D)$3,650 unfavorable
• E)$1,200 unfavorable

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Definitions:

Proprietor

An individual who owns and runs a business, possessing exclusive legal rights and responsibilities regarding its operations.

Absolute Liability

A legal principle where a party is held responsible for damages or loss, irrespective of intent or negligence.

Bailee

An individual or entity who temporarily holds property on behalf of another under a bailment agreement.

Skilled Shopkeeper

An individual who possesses specific expertise and skills in managing and operating a retail store.