A Favorable Price Variance for Direct Manufacturing Labor Might Indicate

question 93

Multiple Choice

A favorable price variance for direct manufacturing labor might indicate that ________.

• A) employees were paid more than planned
• B) unexpected increase in direct labor rates
• C) underskilled employees are being hired
• D) congestion due to scheduling problems

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Definitions:

Marginal Cost

The increase in total cost that arises from an extra unit of production, which is crucial for decision-making on the quantity of production and pricing.

Total Cost

Total cost is the complete amount of money it takes to produce a good or service, including both fixed and variable costs.

Short Run

A period in economics during which at least one input, such as plant size or capital, is fixed and cannot be changed.

Variable Costs

Variable costs are expenses that change in proportion to the activity or volume of business, such as materials and labor costs.