Reference: 21_05 A Job Was Budgeted to Require Three Hours of Labor

question 107

Multiple Choice

Reference: 21_05
A job was budgeted to require three hours of labor per unit at $8 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000.
-The entry to record the labor costs and variances would include a:

• A) debit to Goods in Process for $198,000.
• B) credit to Factory Payroll for $192,000.
• C) debit to Direct Labor Cost Variance for $6,000.
• D) credit to Direct Labor Cost Variance for $6,000.
• E) credit to Direct Labor Efficiency Variance for $16,000

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Definitions:

Utility Function

An economic model that quantifies the satisfaction or happiness a consumer receives from consuming goods and services.

Expected Utility

A theory in economics that models how agents choose among risky alternatives to maximize their satisfaction.

Income

Receipts garnered on a habitual basis as a result of engaging in work or investment.

Von Neumann-Morgenstern

A theory of expected utility which provides axioms for how rational individuals make decisions under uncertainty.