The Following Information Describes a Company's Usage of Direct Labor

question 78

Multiple Choice

The following information describes a company's usage of direct labor in a recent period. The direct labor efficiency variance is: $\begin{array}{llr} \text { Actual hours used } &45,000\\ \text { Actual rate per hour} &\$15.00\\ \text {Standard rate per hour } &\$14.50\\ \text {Standard hours for units produced } &47,000\\\end{array}$

• A) $29,000 unfavorable.
• B) $29,000 favorable.
• C) $52,500 unfavorable.
• D) $52,500 favorable.
• E) $22,500 unfavorable.

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Definitions:

Non-Unionized Industries

Sectors of the economy where the workforce is not part of a labor union or covered by a collective bargaining agreement.

Recession

A phase of short-term economic downturn marked by decreased business and manufacturing operations, typically recognized by a decline in Gross Domestic Product for two consecutive quarters.

Efficiency-Wage Theory

The concept that employers may pay a higher wage than the market equilibrium to increase worker productivity, loyalty, and satisfaction, thereby reducing turnover and shirking.

Labor Unions

Organizations that represent workers in negotiations with employers over wages, working conditions, and benefits to protect their rights and interests.