A Company Had a $22,000 Favorable Direct Labor Efficiency Variance

question 34

Multiple Choice

A company had a $22,000 favorable direct labor efficiency variance during a time period when the standard rate per direct labor hour was $22 and the actual rate per direct labor hour was $21.If the standard direct labor hours allowed for production were 5,000 what is the amount of actual direct labor cost during this period?

• A) $84,000
• B) $88,000
• C) $100,000
• D) $105,000
• E) $110,000

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Definitions:

Ordinary Assets

Assets that are held for sale in the ordinary course of a business or are otherwise not capital assets, including inventory and property used in a trade or business.

Inventory

Goods and materials held by a business for the purpose of sale or production.

Trade or Business

Trade or Business refers to any activity conducted for profit or livelihood, including goods and services production, buying, selling, or providing services.

Ordinary Loss

A loss incurred in the regular operation of a business or the sale of assets used in the business that can be fully deducted in the year it occurs.