The Costmore Company Uses Standard Costing and Has Established the Following

question 81

Multiple Choice

The Costmore Company uses standard costing and has established the following standards for direc materials and direct labor for each unit it makes:
$\begin{array}{ll}\text { Direct Materials } & 3 \text { gallons at } \$ 5 \text { per gallon } \\\text { Direct Labor } & 1 \text { hour at } \$ 12 \text { per hour }\end{array}$
During July, the company made 4,000 units of product and used 13,000 gallons. The actual price paid for materials was $5.20 per gallon.
Direct Labor used was 3,600 hours and workers were paid $11.75 per hour. An analysis would indicate

• A)a $900 unfavorable labor efficiency variance.
• B)a $900 favorable labor efficiency variance.
• C)a $4,800 favorable labor efficiency variance.
• D)a $4,800 unfavorable labor efficiency variance.

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