Bread Company Has Developed the Following Standards for One of Its

question 37

Multiple Choice

Bread Company has developed the following standards for one of its products.
$\begin{array}{ll}\text { Direct materials: } & 10 \text { kilograms } \times \$ 3 \text { per kilogram } \\\text { Direct labour: } & 2.5 \text { hours } \times \$ 8 \text { per hour } \\\text { Variable manufacturing overhead: } & 2.5 \text { hours } \times \$ 2 \text { per hour }\end{array}$


$\begin{array}{ll}\text { The following activity occurred during the month of June }\\\text { Materials purchased: } & 125,000 \text { kilograms at } \$ 2.60 \text { per } \\& \text { kilogram } \\\text { Materials used: } & 110,000 \text { kilograms } \\\text { Units produced: } & 10,000 \text { units } \\\text { Direct labour: } & 24,000 \text { hours at } \$ 7.50 \text { per hour } \\\text { Actual variable manufacturing overhead: } & \$ 51,000\end{array}$ The company records materials price variances at the time of purchase.
-Refer to the figure. What is the direct labour efficiency variance?

• A)$8,000 favourable
• B)$8,000 unfavourable
• C)$20,000 unfavourable
• D)$20,000 favourable