Assume Martin Guitar Company Has a Standard of 3 Hours

question 141

Multiple Choice

Assume Martin Guitar Company has a standard of 3 hours of direct labor per unit produced and $20 per hour for the labor rate.During last period,the company used 24,000 hours of direct labor at a $456,000 total cost to produce 6,000 units.Compute the direct labor rate and efficiency variances.

• A) Rate variance: $24,000 unfavorable; Efficiency variance: $120,000 favorable.
• B) Rate variance: $24,000 favorable; Efficiency variance: $120,000 unfavorable.
• C) Rate variance: $96,000 favorable; Efficiency variance: $96,000 unfavorable.
• D) Rate variance: $120,000 favorable; Efficiency variance: $24,000 unfavorable.
• E) Rate variance: $120,000 unfavorable; Efficiency variance: $24,000 unfavorable.

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Definitions:

Human Nature

The innate characteristics, including ways of thinking, feeling, and acting, which all human beings share.

Fundamental Attribution Error

A cognitive bias where people are more likely to attribute others' actions to their character or disposition rather than to external factors.

Internal Attributions

The process of ascribing the cause of one's own or others' behaviors and outcomes to internal, personal factors rather than to external or situational factors.

Situational Causes

External factors or circumstances that are considered to influence an individual's behavior.