Sheldon Company manufactures only one product and uses a standard cost system. During the past month, manufacturing operations for the company had the following variances: direct labor rate variance = $30,000 favorable; direct labor efficiency variance = $50,000 unfavorable. Sheldon allows 5 standard direct labor hours per unit produced, and its standard direct labor hourly pay rate is $50. During the month, the company used 25% more direct labor hours than the standard allowed for the output achieved.

What were the total actual direct hours worked (AQ), rounded to the nearest whole number?
A) 1,000.
B) 3,000.
C) 4,000.
D) 5,000.
E) 6,000.

Question

Sheldon Company manufactures only one product and uses a standard cost system. During the past month, manufacturing operations for the company had the following variances: direct labor rate variance = $30,000 favorable; direct labor efficiency variance = $50,000 unfavorable. Sheldon allows 5 standard direct labor hours per unit produced, and its standard direct labor hourly pay rate is $50. During the month, the company used 25% more direct labor hours than the standard allowed for the output achieved.

What were the total actual direct hours worked (AQ) , rounded to the nearest whole number?

What were the total actual direct hours worked (AQ), rounded to the nearest whole number?
A) 1,000.
B) 3,000.
C) 4,000.
D) 5,000.
E) 6,000.

Quizplus · Accepted Answer

To find the actual direct labor hours worked (AQ), we need to first calculate the standard direct labor hours allowed (SQ) based on the output achieved. If the company used 25% more direct labor hours than the standard allowed, then the actual direct labor hours worked is 125% of the standard direct labor hours allowed.
Output achieved = 4,000 units
Standard direct labor hours allowed per unit = 5 hours
Standard direct labor hours allowed (SQ) = 4,000 x 5 = 20,000 hours
Actual direct labor hours worked (AQ) = 125% x 20,000 = 25,000 hours
Therefore, the total actual direct hours worked (AQ) rounded to the nearest whole number is 5,000 hours (option D).

Sheldon Company Manufactures Only One Product and Uses a Standard