Kokko Company Makes a Product That Is Expected to Require

question 101

Multiple Choice

Kokko Company makes a product that is expected to require 2 hours of labor per unit of product.The standard cost of labor is $6.00.Kokko actually used 2.1 hours of labor per unit of product.The actual cost of labor was $6.25 per hour.Kokko made 1,100 units of product during the period.Based on this information alone,the labor usage variance is:

• A) $190 favorable.
• B) $660 unfavorable.
• C) $600 favorable.
• D) $660 favorable.

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Definitions:

Product W8

A hypothetical product referred to by its code name W8, details of which depend on the context.

Direct Labor-Hours

A measure of the total hours worked directly on manufacturing goods or providing services, used in costing and operational efficiency analysis.

Labor-Related

Pertaining to costs, efforts, or issues directly associated with employees or workforce in the process of producing goods or services.

Activity Rate

The predefined cost-driver rate used in Activity-Based Costing to allocate overhead costs to products or services, based on each activity’s usage by those products or services.