Poseidon Marine Stores Company manufactures special metallic materials and decorative fitings 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: 4 pounds per unit $4 per pound Direct labor. 4 hours per unit $15 per hour Poseidon produced 5,000 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 $6,000 F. Which of the following is a logical explanation for this variance? OA. The company paid a lower cost for the direct materials than allowed by the standards. O B. The company used fewer labor hours than allowed by the standards. OC. The company used a lower quantty of direct materials than allowed by the standards. OD. The company paid a lower cost per hour for labor than allowed by the standards.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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