Joe Malay received the following report on the Division's operation for the month of August: Direct labor rate variance = $25,000 unfavorable; Direct labor efficiency variance = $70,000 (?). The standard calls for 3.0 direct labor hours per unit of output at $28.00 per labor hour (SP). The standard direct labor hours allowed for the units manufactured (SQ) is 20 percent more than the total direct labor hours worked (AQ) in August.

How many units (rounded to nearest whole number) of the product were produced in August?
A) 4,000.
B) 4,250.
C) 4,500.
D) 4,750.
E) 5,000.

Question

Joe Malay received the following report on the Division's operation for the month of August: Direct labor rate variance = $25,000 unfavorable; Direct labor efficiency variance = $70,000 (?) . The standard calls for 3.0 direct labor hours per unit of output at $28.00 per labor hour (SP) . The standard direct labor hours allowed for the units manufactured (SQ) is 20 percent more than the total direct labor hours worked (AQ) in August.

How many units (rounded to nearest whole number) of the product were produced in August?

How many units (rounded to nearest whole number) of the product were produced in August?
A) 4,000.
B) 4,250.
C) 4,500.
D) 4,750.
E) 5,000.

Quizplus · Accepted Answer

The standard direct labor hours allowed (SQ) is 20% more than the actual hours worked (AQ). Let AQ be the actual hours worked. Then, SQ = 1.2 * AQ. The standard calls for 3.0 hours per unit, so SQ = 3 * units produced. Solving 1.2 * AQ = 3 * units gives units = AQ / 2.5. Since AQ = SQ / 1.2, and SQ = 3 * units, we find units = 5,000.

Joe Malay Received the Following Report on the Division's Operation