The Following Information Describes Production Activities of the Central Corp

question 51

Essay

The following information describes production activities of the Central Corp.:
30,000 units were completed during the year
Budgeted standards for each unit produced:
1/2 lb. of raw material at $4.15 per lb.
10 minutes of direct labor at $12.50 per hour
Compute the direct materials price and quantity and the direct labor rate and efficiency variances. Indicate whether each variance is favorable or unfavorable.

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Definitions:

Productive Resources

The factors required for the production of goods and services, usually classified into land, labor, capital, and entrepreneurship.

Self-Interest

The personal interest or advantage that individuals seek to maximize their own welfare or benefit.

Public Good

A product or service that is available for all people to consume, regardless of who pays for it, and where one person's consumption does not reduce availability to others.

Adam Smith

A Scottish economist and philosopher, best known for his book "The Wealth of Nations," in which he laid the foundations of classical free market economic theory.