Montana Company Uses a Standard Costing System

question 37

Multiple Choice

Montana Company uses a standard costing system. The following information pertains to direct labor costs for the month of February: Standard direct labor rate per hour $15.00
Actual direct labor rate per hour $13.50
Labor rate variance $18,000 favorable
Actual output 1,000 units
Standard hours allowed for actual production 10,000 hours
What is the total labor budget variance for Montana Company?

• A) $18,000 (F)
• B) $12,000 (U)
• C) $18,000 (U)
• D) $12,000 (F)

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Definitions:

Internal Validity

The degree to which a study establishes a trustworthy cause-and-effect relationship between a treatment and an outcome.

Experimental Methods

A research methodology in psychology and other sciences involving the manipulation of variables to determine cause and effect relationships.

Biases

Systematic patterns of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion.

Logical Errors

Faulty reasoning patterns or mistaken beliefs that often result from cognitive biases or limitations.