The Management of Zeta Company Has Calculated the Following Variances

question 89

Multiple Choice

The management of Zeta Company has calculated the following variances: $$\begin{array} { | l | r | } \hline \text { Direct materials cost variance } & \$ 8,000 \mathrm { U } \\\hline \text { Direct materials efficiency variance } & 35,000 \mathrm {~F} \\\hline \text { Direct labor cost variance } & 15,000 \mathrm {~F} \\\hline \text { Direct labor efficiency variance } & 12,000 \mathrm { U } \\\hline \text { Total variable overhead variance } & 7,000 \mathrm {~F} \\\hline \text { Total fixed overhead variance } & 3,050 \mathrm {~F} \\\hline\end{array}$$
-Calculate the total direct labor variance of Zeta Company.

• A) $15,000 F
• B) $10,050 F
• C) $27,000 F
• D) $3,000 F

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Definitions:

Coase Theorem

An economic theorem which states that if property rights exist, only a few transactions cost, and externalities can be traded, then the allocation of resources will be efficient and invariant of who owns the rights.

Impediments To Bargaining

Factors that obstruct or hinder the negotiation process between parties, potentially leading to inefficiencies or failure to reach an agreement.

Liability Rules

Legal principles that define the obligations of parties to compensate for damages or losses they have caused.

Compensate

To make amends or give an equivalent to someone for loss, damage, or suffering experienced.