Sheldon Company Manufactures Only One Product and Uses a Standard

question 162

Multiple Choice

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 was the direct labor flexible-budget (FB) variance for the month (rounded to the nearest dollar) ?

• A) $20,000 unfavorable.
• B) $25,000 unfavorable.
• C) $37,500 favorable.
• D) $62,500 unfavorable.
• E) $80,000 unfavorable.

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