The budget for the month of May was for 9,000 units at a direct materials cost of $15 per unit.Direct labor was budgeted at 45 minutes per unit for a total of $81,000.Actual output for the month was 8,500 units with $127,500 in direct materials and $77,775 in direct labor expense.The direct labor standard of 45 minutes was obtained throughout the month.Variance analysis of the performance for the month of May would show a(n)(CMA adapted)
A)Favorable materials efficiency (quantity)variance of $7,500.
B)Favorable direct labor efficiency variance of $1,275.
C)Unfavorable direct labor efficiency variance of $1,275.
D)Unfavorable direct labor price (rate)variance of $1,275.

Question

Quizplus · Accepted Answer

The actual direct labor cost was $77,775 for 8,500 units, which means the actual rate per unit was higher than the budgeted rate, leading to an unfavorable direct labor price (rate) variance.

The Budget for the Month of May Was for 9,000