Dexter Surgical Tools Has Set the Following Perfection Direct Labour

question 19

Multiple Choice

Dexter Surgical Tools has set the following perfection 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.
If Dexter Surgical Tools decides to use a practical standard instead of the perfection standard, the labour efficiency variance is likely to

• A) remain unchanged.
• B) increase.
• C) decrease.
• D) not enough information.

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