Dexter Surgical Tools Has Set the Following Direct Labour Standard

question 20

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.
The labour efficiency variance for July was

• A) $1200 Favourable.
• B) $1200 Unfavourable.
• C) $1000 Favourable.
• D) $1000 Unfavourable.

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Definitions:

Production Technology

The methods, equipment, and processes used to produce goods and services, impacting efficiency and output levels.

Economists

Professionals who study, develop, and apply theories and concepts from economics and write about economic policy.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full adjustment to changes in market conditions.

Hourly Wage Rate

The amount of money paid for each hour of work.