Dexter Surgical Tools Has Set the Following Direct Labour Standard

question 42

Multiple Choice

Dexter Surgical Tools has set the following direct labour standard: 0.5 hours at $20 per hour, for each unit of Tool #11. The company plans to produce 1200 units of Tool #11 in July; however, the actual production was 1000 units and only 900 units were actually sold. The actual labour cost for July was $22 per hour.
Which of the following is a likely explanation for the July labour efficiency variance?

• A) The standard was set incorrectly.
• B) A machine breakdown has resulted in unanticipated inefficiencies.
• C) The production level was smaller than expected.
• D) Both incorrectly set standards and a machine breakdown are likely explanations.

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Definitions:

Stressful Events

Incidents or conditions that cause significant stress or agitation to an individual.

Type A Personalities

Individuals characterized by competitiveness, urgency, aggressiveness, and an intense drive for achievement.

Type B Personalities

Personality type characterized by a relaxed, patient, and easy-going manner, in contrast to the more stressed and aggressive Type A personalities.

Aggressive

Characterized by or displaying forceful actions or attitudes, often with the intention to dominate or succeed at the expense of others.