Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.

During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct labor efficiency variance was:
A)$750.00 unfavorable.
B)$262.50 favorable.
C)$487.50 favorable.
D)indeterminable using the above information.

Question

Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.
  
During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct labor efficiency variance was:
A)$750.00 unfavorable. 
B)$262.50 favorable. 
C)$487.50 favorable. 
D)indeterminable using the above information.

Quizplus · Accepted Answer

A)(AH - SH)× SR = [1,050 - (10,000 × 0.10)] × $15 = 750 U