Horizon uses standard costs to prepare its flexible budget

Reference no: EM131441213

Horizon Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Horizon 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:4hours per? unit; $17 per hour

Horizon 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 $7,000 F.

Which of the following is a logical explanation for this? variance?

A. The company used a lower quantity of direct materials than allowed by the standards.

B. The company used fewer labor hours than allowed by the standards.

C. The company paid a lower cost for the direct materials than allowed by the standards.

D. The company paid a lower cost per hour for labor than allowed by the standards.

Reference no: EM131441213

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