Biery Corporation Makes a Product with the Following Standard Costs

question 63

Multiple Choice

Biery Corporation makes a product with the following standard costs:

The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 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 efficiency variance for April is:

• A)$2,850 F
• B)$2,850 U
• C)$2,970 F
• D)$2,970 U

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Definitions:

Common Fixed Expenses

Fixed costs that are not tied to any specific product or segment and are incurred by the business as a whole.

Net Operating Income

The profit realized from a business's operations after subtracting operating expenses from operating revenues.

Break-even

The point at which total revenues equal total costs, resulting in no net profit or loss for the business.

Divisional Segment Margin

The amount of profit or loss generated by a specific division or segment of a company, often used to assess the segment's financial performance.