Galla Corporation Makes a Product with the Following Standard Costs

question 160

Multiple Choice

Galla Corporation makes a product with the following standard costs: The company budgeted for production of 2, 400 units in June, but actual production was 2, 500 units.The company used 19, 850 pounds of direct material and 980 direct labor-hours to produce this output.The company purchased 21, 700 pounds of the direct material at $6.70 per pound.The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. 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 rate variance for June is:

• A)$800 U
• B)$784 U
• C)$800 F
• D)$784 F

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Definitions:

Balance Sheet Methods

Techniques used in preparing and presenting the balance sheet, a financial statement showing a company's assets, liabilities, and equity at a specific point in time.

Receivables Financing

A form of financing where a company uses its accounts receivable as collateral to secure funding from a financial institution.

Maturity Date

The specific date on which a financial instrument (like a bond or loan) becomes due for payment of principal and interest.

Installment Accounts

Installment accounts are credit accounts where the borrower repays the loan amount plus interest in regular payments over a set period.