Mason, Inc

question 102

Multiple Choice

Mason, Inc. uses a standard costing system. Overhead costs are allocated based on direct labour hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labour hour, respectively. Data relevant for the current period include: Direct materials purchased 50,000 kg. @ $12 per kg.
Direct materials used 50,000 kg.
Standard quantity of direct materials
For actual production 45,000 kg.
Direct materials standard price $13 per kg.
Direct labour costs incurred 75,000 hours @ $12 per hour
Standard direct labour hours for
Actual production 78,000 hours
Standard direct labour cost per hour $11 per hour
Variable overhead costs incurred $77,070
Fixed overhead costs incurred $381,920
The direct labour price variance is:

• A)$30,000 Favourable
• B)$30,000 Unfavourable
• C)$75,000 Unfavourable
• D)$78,000 Unfavourable

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Definitions:

Marginal Productivity

The additional output that is produced by adding one more unit of a factor of production, holding other factors constant.

Income Distribution

The way in which total income is divided among the population or different groups in an economy.

Labor Market

The supply and demand for labor, where employers seek to hire workers and workers look for employment.

Equilibrium Level

The equilibrium level is the point at which market supply equals market demand, resulting in a stable market condition where there is no inherent tendency for change.