Fabiano Corporation Makes a Product Whose Direct Labor Standards Are

question 5

Multiple Choice

Fabiano Corporation makes a product whose direct labor standards are 0.5 hours per unit and $23.00 per hour. In February the company produced 3,300 units using 1,640 direct labor-hours. The actual direct labor cost was $38,540.
-The labor rate variance for February is:

• A)$825 U
• B)$820 U
• C)$820 F
• D)$825 F

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Definitions:

Comparative Advantage

The advantage conferred on an individual or country in producing a good or service if the opportunity cost of producing the good or service is lower for that individual or country than for other producers.

Absolute Advantage

The advantage conferred on an individual or country in an activity if the individual or country can do it better than others. A country with an absolute advantage can produce more output per worker than other countries.

Ricardian Advantage

A theory in economics that suggests countries should specialize in producing and exporting goods in which they have a relative productivity advantage.

Opportunity Cost

The sacrifice of gains that could have been obtained from alternative choices when one is selected.