The Dexon Company Makes and Sells a Single Product, Called

question 79

Multiple Choice

The Dexon Company makes and sells a single product, called a Mip, and employs a standard costing system. The following standards have been established for one unit of Mip: $\begin{array}{|l|r|r|}\hline & \text { Standard Quantity or Hours } & \text { Standard Cost per Mip } \\\hline \text { Direct Materials } & 6 \text { board metre } & \$ 9.00 \\\hline \text { Direct Labour } & 0.8 \text { hours } & \$ 9.60 \\\hline\end{array}$
There were no inventories of any kind on August 1. During August, the following events occurred:
Purchased 15,000 board metres at the total cost of $\$ 24,000$ .
Used 12,000 board metres to produce 2,100 Mips.
Used 1,700 hours of direct labour time at a total cost of $\$ 20,060$ .
- To record the incurrence of direct labour cost and its use in production,the general ledger would include what entry to the Labour Rate Variance account?

• A) $240 credit.
• B) $240 debit.
• C) $340 debit.
• D) $340 credit.

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Definitions:

Average Collection Period

The typical duration a business must wait to collect payments from its customers for goods or services sold on a credit basis.

Financial Data

Refers to information related to the financial performance of an entity, including income, expenses, assets, and liabilities.

Sales On Account

Transactions where goods or services are sold and payment is deferred to a future date, essentially selling on credit.

Cost Of Goods Sold

The costs directly connected with generating the goods a firm sells to its customers.