The Tulip Company Makes Mugs for Which the Following Standards

question 85

Multiple Choice

The Tulip Company makes mugs for which the following standards have been developed:
$\begin{array}{lll}&\text { Standard Inputs Expected }&\text { Standard Price }\\\text { Expected }&\text { For Each Unit of Output }&\text { Per Unit of Input }\\\hline\text { Direct Materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \\\text { Direct Labor } & 2.5 \text { hours } & \$ 8 \text { per hour }\end{array}$
Production of 400 mugs was expected in August,but 440 mugs were actually completed.Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce.Direct labor cost for the month was $5,310,and the actual pay per hour was $9.00.What is the direct labor price variance for August?

• A) $420 Favorable
• B) $420 Unfavorable
• C) $590 Favorable
• D) $590 Unfavorable

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Definitions:

Bilateral Monopoly

A market structure where a single buyer (monopsony) faces a single seller (monopoly), leading to unique negotiation dynamics for prices and terms of exchange.

Inclusive Union

A labor union that aims to represent a wide variety of workers, regardless of occupation or industry, focusing on broad-based membership and rights.

Perfectly Competitive

A market structure where there are many sellers and buyers, products are homogeneous, and there are no barriers to entry or exit.

Compensating Differences

Differences in the wages received by workers in different jobs to compensate for the nonmonetary differences between the jobs.