In the Calculation of Product Costs for Value Streams with Multiple

question 77

Multiple Choice

In the calculation of product costs for value streams with multiple products, units shipped instead of units produced is used as the denominator because

• A)it reduces conversion costs assigned to the value stream.
• B)it motivates managers to reduce inventories.
• C)units shipped are always greater than units produced.
• D)units shipped is not used.

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Definitions:

Labor Rate Variance

The variance between the real labor expenses and the anticipated (or benchmark) cost.

Labor Efficiency Variance

The gap between the number of hours actually worked and the number of standard hours projected, multiplied by the standard wage rate.

Direct Labor

The expenses associated with salaries for workers directly involved in the creation or production of products.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, based on standards.