The Baby Clothing Company Makes and Sells a Single Product

question 83

Multiple Choice

The Baby Clothing Company makes and sells a single product, called a New bodysuit and employs a standard costing system. The following standards have been established for one unit of New bodysuit:

$\begin{array}{|l|r|r|}\hline & \text { Standard Quantity or Hours } & \begin{array}{r}\text { Standard Cost per New } \\\text { bodysuit }\end{array} \\\hline \text { Direct Materials } & 5 \text { board metre } & \$ 8.00 \\\hline \text { Direct Labour } & 0.7 \text { hours } & \$ 8.40 \\\hline\end{array}$
There were no inventories of any kind on August 1. During August, the following events occurred:
Purchased 14,000 board metres at the total cost of $\$ 22,000$ .
Used 10,300 board metres to produce 2,100 New bodysuits.
Used 1,400 hours of direct labour time at a total cost of $\$ 18,060$ .
- To record the incurrence of direct labour costs and its use in production,the general ledger would include what entry to the Labour Efficiency Variance account?

• A) $840 debit.
• B) $480 credit.
• C) $1,200 debit.
• D) $1,200 credit.