A Company Has a Standard of 2 Hours of Direct

question 86

Multiple Choice

A company has a standard of 2 hours of direct labor per unit produced and $18 per hour for the labor rate. During last period, the company used 9,500 hours of direct labor at a $152,000 total cost to produce 4,000 units. Compute the direct labor rate and efficiency variances.

• A) Rate Variance: $19,000 unfavorable; Efficiency Variance: $27,000 favorable.
• B) Rate Variance: $63,829 unfavorable; Efficiency Variance: $99,000 unfavorable.
• C) Rate Variance: $152,000 favorable; Efficiency Variance: $99,000 unfavorable.
• D) Rate Variance: $19,000 favorable; Efficiency Variance: $27,000 unfavorable.
• E) Rate Variance: $152,000 unfavorable; Efficiency Variance: $99,000 favorable.

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Definitions:

Taxing Agency

A government body responsible for administering and collecting taxes from individuals and businesses.

Gross Wages

Gross Wages refer to the total amount of compensation a worker earns before any deductions or taxes are applied, including regular pay, overtime, and bonuses.

Overtime

Payment for hours worked by employees beyond their standard working hours, usually at a higher rate.

Cost Per Employee

The total cost incurred by a company divided by the number of its employees, often used to measure efficiency.