Answer the Following Questions Using the Information Below:
Berman's Camera

question 70

Multiple Choice

Answer the following questions using the information below:
Berman's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
$\begin{array}{lrrr} &\text { Flexible }&\text { Variances }\\& \text { Budget } & \text { Price } & \text { Efficiency } \\\text { Material A } & \$ 40,000 & \$ 1,000 \mathrm{~F} & \$ 3,000 \mathrm{U} \\\text { Material B } & 60,000 & 500 \mathrm{U} & 1,500 \mathrm{~F} \\\text { Direct manufacturing labor } & 80,000 & 500 \mathrm{U} & 2,500 \mathrm{~F}\end{array}$
-The most likely explanation of the above direct manufacturing labor variances is that ________.

• A) the average wage rate paid to employees was less than expected
• B) employees did not work as efficiently as expected to accomplish the job
• C) the company may have assigned more experienced employees this month than originally planned
• D) management may have a problem with budget slack and might be using lax standards for both labor-wage rates and expected efficiency

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Definitions:

Farms

Land and the buildings on it used for the cultivation of crops and rearing of animals to produce food, wool, and other products.

Price

The cost needed to buy a product or service, usually set by the interplay of supply and demand.

Quantity

The amount or number of a material or immaterial goods that is measured or counted.

Long Run

In economics, a period of time in which all factors of production and costs are variable, allowing all inputs to be adjusted.