Poseidon Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Poseidon uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows:
Direct materials: 3 pounds per unit; $3 per pound
Direct labor: 5 hours per unit; $15 per hour
Poseidon produced 5000 units during the quarter. At the end of the quarter, an examination of the labor costs records showed that the direct labor cost variance was $8000 F. Which of the following is a logical explanation for this variance?
A. The company paid a lower cost for the direct materials than allowed by the standards.
B. The company used a lower quantity of direct materials than allowed by the standards.
C. The company paid a lower cost per hour for labor than allowed by the standards.
D. The company used fewer labor hours than allowed by the standards.
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Ответ:
C. The company paid a lower cost per hour for labor than allowed by the standards.
Explanation:
direct labor rate/price variance = (AR - SR) x AH
Any favorable variance will result from a lower actual rate than the standard rate. Any difference in the actual number of hours will result in a variance of labor efficiency.
In this case, assuming that actual hours were the same as standard hours, 5,000 x 5 = 25,000 direct labor hours were employed. This means that the actual rate was:
-8,000 = (AR - 15) x 25,000
AR - 15 = -8,000 / 25,000 = 0.32
AR = $14.68
Ответ:
(C)
Explanation:
Based on the scenario being described within the question it can be said that Engineer A should remain in consideration for the project, but not change his bid. This is mainly due to the fact that if Engineer A wants it he should stick to his decision and there is no evidence that the client is telling the truth about Engineer B's bid. The client may be benefiting from Engineer A bidding more.