Decena Corporation Manufactures One Product

question 6

Multiple Choice

Decena Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. Information concerning the direct labor standards for the company's only product is as follows:
During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 15,830 hours at an average cost of $18.50 per hour. The company calculated the following direct labor variances for the year:
Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.

-When the direct labor cost is recorded,which of the following entries will be made?

• A) ($7,915) in the Labor Efficiency Variance column
• B) $7,915 in the Labor Rate Variance column
• C) $7,915 in the Labor Efficiency Variance column
• D) ($7,915) in the Labor Rate Variance column

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Definitions:

Intuitive

Ability to understand or know something immediately based on instinct rather than conscious reasoning.

Conservation

The cognitive ability to understand that certain properties of objects, such as volume or mass, remain the same even when their outward appearance changes.

Object Permanence

The understanding that objects continue to exist even when they cannot be seen, heard, or touched, which develops in infancy.

Operations

In cognitive psychology, it refers to mental actions that allow individuals to mentally manipulate objects and solve problems.