Figure 17-5
Ebola Company Has Developed the Following Standards for One

question 49

Multiple Choice

Figure 17-5
Ebola Company has developed the following standards for one of its products: $\begin{array}{ll}\text { Direct materials } & 20 \text { pounds } \times £ 4 \text { per pound } \\\text { Direct labour } & 5 \text { hours } \times £ 18 \text { per hour } \\\text { Variable overhead } & 5 \text { hours } \times £ 4 \text { per hour }\end{array}$ The following activities occurred during the month of October: $\begin{array}{ll}\text { Materials purchased } & 230,000 \text { pounds at } £ 4.20 \text { per pound } \\\text { Materials used } & 220,000 \text { pounds } \\\text { Units produced } & 10,000 \text { units } \\\text { Direct labour } & 51,000 \text { hours at } £ 17.70 \text { per hour } \\\text { Actual variable overhead } & £ 240,000\end{array}$ The company records materials price variances at the time of purchase.
-Refer to Figure 17-5. Ebola's variable overhead efficiency variance would be

• A)£4,000 favourable.
• B)£4,000 unfavourable.
• C)£8,000 favourable.
• D)£12,000 unfavourable.

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Definitions:

Direct Labor Cost

The total cost of workforce directly involved in the production of goods or services, excluding indirect labor.