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 direct labor hours per unit of output at $28 per labor hour.The standard direct labor hours for the units manufactured is 20 percent more than the total direct labor hours actually worked in August.How many units of the product were produced in August?
A)4,000.
B)4,250.
C)4,500.
D)4,750.
E)5,000.

Question

Quizplus · Accepted Answer

The standard direct labor hours for the units manufactured is 20% more than the actual hours worked. Let x be the actual hours worked. Then, 1.2x is the standard hours. Since the standard is 3 hours per unit, the units produced = 1.2x / 3. Given the direct labor rate variance, we can calculate x and find the units produced. Solving gives 5,000 units.

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