The Russell Company Provides the Following Standard Cost Data Per

question 133

Multiple Choice

The Russell Company provides the following standard cost data per unit of product: $\begin{array}{llcc} \text { Direct material ( 3 gallons @ \$ 6 per gallon) } & \$ 18.00 \\ \text {Direct labor ( 2 hours @ \$ 10 per hour) } &\$ 20.00\end{array}$
During the period,the company produced and sold 22,000 units incurring the following costs: $\begin{array}{llcc} \text {Direct material } & \text {68,000 gallons @ \$ 5.90 per gallon} \\ \text {Direct labor } & \text {45,500 hours @ \$ 9.75 per hour}\end{array}$
The direct labor usage variance was:

• A) $15,000 unfavorable.
• B) $15,000 favorable.
• C) $14,625 unfavorable.
• D) $14,625 favorable.

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Definitions:

Work in Process

Refers to materials that are in the process of being transformed into finished goods in a manufacturing environment.

Production

The process of creating goods and services through the combination of labor, materials, and machinery.

Direct Labor Cost

The wages paid to employees who are directly involved in the production of goods or services.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost, based on hours worked and pay rates.