Allan Company Manufactures Overalls -Refer to the Figure

question 90

Multiple Choice

Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows:
Allan required 600,000 m at $1.95 per metre to make the 125,000 overalls.
$\begin{array}{lll}\text {Direct materials ( \( 5 \mathrm{~m} \) of denim \( (012 \) per metre) }&\$10\\\text { Direct labour (3 hours \( @ \$ 6 \) per hour) }&18\\\end{array}$

-Refer to the Figure.What is the entry to record the direct labour variances?

• A)Work in Process 2,265,625Labour Efficiency Variance 75,000Labour Rate Variance 90,625Accrued Payroll 2,250,000
• B)Work in Process 2,250,000Labour Rate Variance 90,625Labour Efficiency Variance 75,000Accrued Payroll 2,265,625
• C)Work in Process 2,250,000Labour Rate Variance 93,750Labour Efficiency Variance 78,125Accrued Payroll 2,265,625
• D)Work in Process 2,265,625Labour Efficiency Variance 78,125Labour Rate Variance 93,750Accrued Payroll 2,250,000

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Definitions:

Disaffirm

The legal right of a party, particularly a minor or someone under duress, to renounce or void a contract or agreement.

Unqualified Right

A right that is absolute and not subject to any conditions or restrictions.

Capacity

In contract law, the legal ability to enter into a contractual relationship.

Voidable Presumption

A legal assumption that a contract or agreement can be invalidated or annulled based on certain circumstances, usually due to concerns like fraud or misrepresentation.