Question

In a mini-case scenario, what are computed regarding direct labor and overhead variances?

a) Returns and dividends
b) Capital gains and losses
c) Profits and revenues
d) Labor and overhead variances

Answer 1

Direct labor and overhead variances are computed to measure the difference between the actual and standard costs in a mini-case scenario, providing valuable information for management.

Step-by-step explanation:

In a mini-case scenario, direct labor and overhead variances are computed to measure the difference between the actual costs incurred and the standard costs that were expected.

The direct labor variance is calculated by comparing the actual direct labor cost to the standard direct labor cost, while the overhead variance is calculated by comparing the actual overhead costs to the standard overhead costs.

These variances provide valuable information for management to assess and control costs, identify areas for improvement, and make informed decisions.