The Following Labour Standards Have Been Established for a Particular

question 16

Multiple Choice

The following labour standards have been established for a particular product: $\begin{array}{ll}\text { Standard labour hours per unit of output }&8.10 \text { hours }\\\text { Standard labour rate }&£ 14.40 \text { per hour }\end{array}$

The following data pertain to operations concerning the product for the last month:Actual hours worked $\quad 8,700$ hours
Actual total labour cost $£ 129,195$
Actual output $\quad$ $\quad$ $\quad$ 1,000 units
- What is the labour rate variance for the month?

• A)£450 F
• B)£3,915 F
• C)£3,915 U
• D)£450 U

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Definitions:

Break-Even Calculations

An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue, indicating no net loss or gain.

Absorption Costing

An accounting method that includes all direct costs and allocated overhead costs in the cost base of manufactured goods.

Variable Costing

A costing method that includes only variable production costs (direct labor, direct materials, and variable manufacturing overhead) in the cost of goods sold, with fixed manufacturing overhead treated as period costs.

Direct Labor

The wages and related expenses for workers who are directly involved in the manufacturing of products.