Sheldon Company Manufactures Only One Product and Uses a Standard

question 2

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 (F) ; 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 units produced.

How many units of the product were produced during the past month (rounded to the nearest whole number) ?

• A) 800.
• B) 1,000.
• C) 1,200.
• D) 1,500.
• E) 2,000.

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Definitions:

Net Income

The amount of profit left after all operating expenses, taxes, and interest payments are deducted from total revenue.

Revenues

Revenues are the total income earned by a company from its normal business activities, before any expenses are deducted.

Expenses

Costs incurred in the process of earning revenue, typically categorized as certain costs necessary to operate a business.

Assets Increase

A rise in the company's resources, resulting from transactions that bring future economic benefits to the entity.