Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 11

Multiple Choice

Use the information below to answer the following questions. $$\begin{array} { l c c } & \text { Budget for April } & \text { Actual for April } \\\text { Output } & 40,000 \text { units } & 40,000 \text { units } \\\text { Sales } & \$ 400,000 & \$ 400,000 \\\text { Raw materials } & \$ 80,000 & \$ 88,000 \\\text { Labour } & \$ 200,000 & \$ 180,000 \\\text { Overheads } & 225,000 & 305,000\end{array}$$
-Refer to the table above. The labour variance can best be described as:

• A)an adverse variance resulting from excessive use of labour and/or a rise in the hourly rate of pay.
• B)a favourable variance resulting from the efficient use of labour and/or a reduction in the hourly pay rate.
• C)being caused by an increase in the pay rate for labour.
• D)being caused by more efficient labour.

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Definitions:

Special Order

A one-time order not considered part of the company's normal ongoing operations, often requiring special pricing and production considerations.

Variable Costs

Expenses that fluctuate directly with changes in production volume, such as raw materials and direct labor.

Capacity

The maximum level of output that a company can sustain to make a product or provide a service under normal conditions.

Absorption Costing

A financial recording technique that incorporates all costs associated with manufacturing (such as direct materials, direct labor, along with variable and fixed overhead expenses) into the product's cost.