Dawson Company has a union contract which calls for an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year.This suggests that:
A)The labor rate variance for July will be unfavorable.
B)The labor rate variances during the first half of the current year have been favorable.
C)The standard labor cost per unit should be revised as of July 1.
D)The labor efficiency variance for July will be unfavorable.

Question

Quizplus · Accepted Answer

The union contract calls for an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year. This means that the standard labor cost per unit should be revised as of July 1 to reflect the new wage rate.

Dawson Company Has a Union Contract Which Calls for an 8