Biscuit Company Has Developed the Following Standards for One of Its

question 78

Multiple Choice

Biscuit Company has developed the following standards for one of its products. Direct labor hours is the driver used to assign overhead costs to products. Direct materials: 10 pounds × $3 per pound
Direct labor: 2.5 hours × $8 per hour
Variable manufacturing overhead: 2.5 hours × $2 per hour
The following activity occurred during the month of June:
Materials purchased: 125,000 pounds at $2.60 per pound
Materials used: 110,000 pounds
Units produced: 10,000 units
Direct labor: 24,000 hours at $7.50 per hour
Actual variable manufacturing overhead: $51,000
The company records materials price variances at the time of purchase.
The direct labor efficiency variance is

• A) $8,000 unfavorable.
• B) $8,000 favorable.
• C) $20,000 unfavorable.
• D) $20,000 favorable.