The static budget for the month of May was for 12,500 units with direct materials at $22 per unit. Direct labor was budgeted at 35 minutes per unit for a total of $87,000. Actual output for the month was 12,000 units with $264,000 in direct materials and $87,000 in direct labor expense. The direct labor standard of 35 minutes was maintained throughout the month.

Determine whether a favorable or unfavorable variance occurred and what caused it.

Favorable/Unfavorable - Answer:

Amount - Answer: