The Alpha Company Produces Toys for National Distribution

question 92

Multiple Choice

The Alpha Company produces toys for national distribution. Standards for a particular toy are:

Materials: 12 grams per unit at 56?per gram.
Labour: 2 hours per unit at $2.75 per hour.

During the month of December, the company produced 1,000 units. Information for the month follows:

Materials: 14,000 grams were purchased and used at a total cost of $7,140.
Labour: 2,500 hours worked at a total cost of $8,000.


-What was the labour rate variance?

• A) $1,125 favourable.
• B) $1,125 unfavourable.
• C) $2,500 favourable.
• D) $2,500 unfavourable.

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Definitions:

Profit Margin

Profit margin is a financial metric used to assess a company's profitability by comparing net income to sales, indicating how much of each dollar in revenue a company keeps as profit.

Anticipated Amount

The anticipated amount is an estimate of funds expected to be received or paid in the future.

External Financing

Funds raised from sources outside the company, including banks, investors, or public markets.

Operating Capacity

The maximum output or the level of service that a company can achieve with its current resources under normal conditions.