Answered: If a company assigns factory labor to…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 2CMA: Marten Company has a cost-benefit policy to investigate any variance that is greater than 1,000 or...

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If a company assigns factory labor to production at a cost of $84,000 when standard cost is $80,000, it will

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credit Labor Price Variance for $4,000.

credit Labor Quantity Variance for $4,000.

debit Labor Price Variance for $4,000.

debit Labor Quantity Variance for $4,000.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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