QUESTION 27

Reference: 10-05

(Appendix 10B) The Dexon Company makes and sells a single product, called a Mip, and employs a standard costing system. The following standards have been established for one unit of Mip:

Standard Quantity or HoursStandard Cost per Mip

Direct Materials 6 board metre $9.00

Direct Labour 0.8 hours $9.60

There were no inventories of any kind on August 1. During August, the following events occurred:

Purchased 15,000 board metres at the total cost of $24,000.

Used 12,000 board metres to produce 2,100 Mips.

Used 1,700 hours of direct labour time at a total cost of $20,060.

(Appendix 10B) To record the incurrence of direct labour costs and its use in production, the general ledger would include what entry to the Labour Efficiency Variance account?

Question 27 options:

A)

$480 credit.

B)

$1,200 credit.

C)

$1,200 debit.

D)

$240 debit.