Assume That the Standard Cost to Make One Finished Unit

question 103

Multiple Choice

Assume that the standard cost to make one finished unit includes two hours of direct labor at $9 per hour. During May, 25,000 direct labor hours were worked, 12,000 units of product were manufactured, and total direct labor cost was $219,000. What is the (approximate) labor efficiency variance for May?

• A) $9,000 unfavorable
• B) $8,760 unfavorable
• C) $8,760 favorable
• D) $9,000 favorable

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Definitions:

Net Requirement

The total amount of a material or resource needed, after accounting for inventory on hand and any scheduled receipts.

Aggregate Planning

A marketing activity that aims to balance supply and demand by determining the most efficient level of production over a given time frame.

MRP

Material Requirements Planning, a system for managing manufacturing processes by determining material requirements and scheduling production activities.

Gross Material Requirements

The total amount of raw materials needed to produce a particular quantity of finished goods, without accounting for waste or efficiency variations.