6) Heavy Products, Inc. developed standard costs for direct material and direct

Question

6) Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. Direct materials Direct labor Budgeted quantity 0.30 pounds 0.25 hours Budgeted price $90 per pound $30 per hour During June, Heavy Products produced and sold 15,000 containers using 2,400 pounds of direct materials at an average cost per pound of $92 and 3,750 direct manufacturing labor-hours at an average wage of $91.25 per hour. The direct manufacturing labor efficiency variance during June is A) $85,547 unfavorable B) $229,687.5 favorable C) $918,750 unfavorable D) $0

Explanation / Answer

Direct labour efficiency variance = (Standard hour-actual hour)Standard rate

                                               = (15000*.25-3750)*30

Direct labour efficiency variance = 0

So answer is d) $0

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