Sheldon Company manufactures only one product and uses a standard cost system.During the past month,the manufacturing operations 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 rate is $50.During the month,the company used 25 percent more direct labor hours than the standard allowed.How many units of the product were produced during the past month?
A)800.
B)1,000.
C)1,200.
D)1,500.
E)2,000.

Question

Quizplus · Accepted Answer

The direct labor rate variance is favorable, which means that the actual labor rate was lower than the standard rate. The direct labor efficiency variance is unfavorable, which means that the actual labor hours used were more than the standard hours allowed. The company used 25 percent more direct labor hours than the standard allowed, which means that the actual labor hours used were 125 percent of the standard hours allowed. Therefore, the actual labor hours used were 5 * 125% = 6.25 hours per unit. The total number of units produced can be calculated by dividing the total actual labor hours used by the actual labor hours used per unit: 25,000 / 6.25 = 4,000 units.

Sheldon Company Manufactures Only One Product and Uses a Standard