Sheldon Company manufactures only one product and uses a standard cost system. D

Question

Sheldon Company manufactures only one product and uses a standard cost system. During the past month, the manufacturing operations had the following variances: Direct labor rate variance $32,000 Favorable. Direct labor efficiency variance = $54,000 Unfavorable. Sheldon allows 5.30 standard direct labor hours per unit produced, and its standard direct labor hourly rate is $53. During the month, the company used 27.00% more direct labor hours than the standard allowed. What was the standard laborcost of units produced for the month? $32,000 $254,000 $200,000 $54,000 $222,000

Explanation / Answer

Direct Labor efficiency variance = (Standard hours - Actual hours) x Standard Rate
- $54,000 = (X - 1.27X) x $5.30
X = 37,735.85

Standard labor cost = 37,735.85 x $5.30 = $200,000

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