A Company Receives an Unusually High Number of Orders in a Month

question 55

Multiple Choice

A company receives an unusually high number of orders in a month. To produce all of the orders within the scheduled dates of delivery, the company pays employees an extra $10 per hour for every hour of overtime the employees work. Which variance is directly impacted?

• A) Materials price variance
• B) Materials efficiency variance
• C) Labour price variance
• D) Labour efficiency variance

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Definitions:

Market Price

The price at which a good or service is offered in the marketplace, determined by supply and demand.

Demand for Workers

The total amount of labor or workforce that employers are willing and able to hire at a given wage rate and time.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers, resulting in no excess supply or demand in the labor market.

Supply of Labor

The total hours that workers are willing and able to work in a given period, influenced by factors such as wages, working conditions, and labor market policies.