Question

MajorNet Systems is a start-up company that makes connectors for high-speed Internet connections. The company has budgeted variable costs of $145 for each connector and fixed costs of $7,500 per month. MajorNet’s static budget predicted production and sales of 100 connectors in August, but the company actually produced and sold only 84 connectors at a total cost of $21,000.

MajorNet Systems’s managers could set direct labor standards based on

a. time-and-motion studies.

b. continuous improvement.

c. benchmarking.

d. All of the above.

Answer 1

Option D. All of the above.

Step-by-step explanation:

The reason is that time and motion studies is basically about scientific engineering and is helpful in increasing the efficiency. Hence is can be used for setting direct labor standards.

Furthermore, continuous improvement model would be used for looking at processes that will be helpful in increasing the efficiency. So taking account of such type of future efficiency gain can be helpful in setting standards.

Benchmark in the industry or of a competitor can also be used to set standards.

Hence all of the options are correct.