Green Garden Supply Budgeted Three Hours of Direct Labour Per

question 128

Multiple Choice

Green Garden Supply budgeted three hours of direct labour per unit at $10.00 per hour to produce 500 units of product. The 500 units were completed using 1,600 hours of direct labour at $10.50 per hour.
-What is the direct labour efficiency variance at Green Garden Supply?

• A) $1,000 unfavourable
• B) $1,000 favourable
• C) $1,050 unfavourable
• D) $1,050 favourable

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Definitions:

Aging Receivables

A method of categorizing accounts receivable based on how long they have been outstanding to assess and manage credit risk.

Bad Debt Expense

Represents the portion of receivables that a company estimates it will not be able to collect.

Allowance for Doubtful Accounts

A contra account that estimates the portion of accounts receivable which may not be collectible.

Uncollectible Accounts

Refers to debts owed to a company that it does not expect to be paid due to various reasons such as bankruptcy of the debtor.