Kenosha Industries, Inc., (KII) developed the following standard costs for direct material and direct labor for one of their major products, the 10-gallon plastic container.

	Standard Quantity	Standard Price
Direct materials	0.10 pounds	$30 per pound
Direct labor	0.05 hours	$15 per hour

During August, KII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of $15.25 per hour.

a)August's direct labor efficiency variance was:

$125 unfavorable.

$142,375 favorable.

None of the above is correct.

$125 favorable.

b)August's direct labor rate variance was:

$125 favorable.

$125 unfavorable.

None of the above is correct.

$142,375 favorable.