Which of the Following Is the Most Probable Reason a Company

question 221

Multiple Choice

Which of the following is the most probable reason a company would experience an unfavourable labour rate variance and a favourable labour efficiency variance?

• A) The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid, experienced individuals.
• B) The mix of workers assigned to the particular job was heavily weighted towards the use of new, relatively low-paid, unskilled workers.
• C) Because of the production schedule, workers from other production areas were assigned to assist this particular process.
• D) Defective materials caused more labour to be used in order to produce a standard unit.

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Definitions:

Current Assets

Assets that a company expects to convert to cash or use up within one year.

Balance Sheet

A financial statement that reports the assets, liabilities, and owner’s equity at a specific date.

Finished Goods Inventory

Inventory consisting of products that have been completed but not yet sold to customers.

Cost Of Goods Manufactured

The total production cost incurred by a company to produce goods in a specific period, including labor, material, and overhead costs.