Question
A company uses the following standard costs to produce a single unit of output. Direct materials 6 pounds at $1.00 per pound = $ 6.00
A company uses the following standard costs to produce a single unit of output.
Direct materials | 6 pounds at $1.00 per pound | = | $ | 6.00 | |
Direct labor | 0.3 hour at $10.00 per hour | = | $ | 3.00 | |
Manufacturing overhead | 0.3 hour at $5.00 per hour | = | $ | 1.50 | |
During the latest month, the company purchased and used 56,000 pounds of direct materials at a price of $1.10 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $26,400 based on 2,750 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $12,000 and fixed manufacturing overhead incurred was $17,000. Based on this information, the direct labor efficiency variance for the month was:
Multiple Choice
a. $3,600 favorable
b. $1,100 favorable
c. $2,500 unfavorable
d. $2,500 favorable
e. $1,100 unfavorable
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