Davidson Corporation Makes a Product That Has the Following Direct

question 147

Multiple Choice

Davidson Corporation makes a product that has the following direct labor standards:
In September the company produced 4,900 units using 2,210 direct labor-hours. The actual direct labor rate was $22.40 per hour.

-The labor rate variance for September is:

• A)$1,470 U
• B)$1,326 U
• C)$1,326 F
• D)$1,470 F

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Definitions:

Gross Margin

A company's revenue minus its cost of goods sold, expressed as a percentage of revenues, indicating the efficiency of production and sales.

Transfer Price

The price at which goods and services are sold between divisions within the same company, used for internal sales and profit allocation.

Variable Cost

Costs that change in proportion to the goods or services that a business produces.

General Transfer-Pricing Rule

A framework or methodology used to determine the price for goods or services transferred between divisions or subsidiaries of the same company.