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:

Compliance Management

The process of ensuring that a company or organization follows all regulatory and legal requirements.

Ethics Program

A set of procedures, policies, and measures designed by an organization to guide employees' and stakeholders' behaviors in alignment with the organization's ethical standards.

Ethical Decisions

Choices made based on moral principles and values aimed at doing what is right and fair.

Ethical, Legal, Social Responsibility

The obligation of individuals and organizations to act in a manner that is morally correct, abides by the law, and benefits society.