Use the information below to answer the following question(s).
A company makes table lamps, for which the following standards have been developed:
During January, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram.
Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-For any actual level of output, the difference between the input that was actually used and the input should have been used is
A) an effectiveness variance.
B) a purchase cost variance.
C) the variance rate.
D) a price variance.
E) an efficiency variance.

Question

Use the information below to answer the following question(s).
A company makes table lamps, for which the following standards have been developed:
  During January, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram.
Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-For any actual level of output, the difference between the input that was actually used and the input should have been used is
A) an effectiveness variance. 
B) a purchase cost variance. 
C) the variance rate. 
D) a price variance. 
E) an efficiency variance.

Quizplus · Accepted Answer

The difference between the input that was actually used and the input that should have been used is called an efficiency variance. This measures how efficiently the resources (materials and labour) were used in production.

Use the Information Below to Answer the Following Question(s)