Ortman Corporation Makes a Product with the Following Standard Costs

question 41

Multiple Choice

Ortman Corporation makes a product with the following standard costs: The company reported the following results concerning this product in May. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for May is:

• A)$483 U
• B)$510 U
• C)$483 F
• D)$510 F

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Definitions:

Net Cash Inflow

The difference between a company's cash receipts and its cash disbursements during a specific period.

Cumulative Surplus

The total amount of net income retained by a company over time, which has not been distributed to shareholders as dividends.

Minimum Cash Balance

The least amount of cash a company needs on hand to meet its immediate operational expenses and financial obligations.

Current Ratio

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.