Mid City Products Inc. (MCP), developed standard costs for direct material and d
ID: 2570301 • Letter: M
Question
Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.
Budgeted quantity Budgeted price
Direct materials 4 pounds $7.25 per pound
Direct labor 0.60 hours $17.00 per hour
During September, MCP produced and sold 2,000 units using 8,200 pounds of direct materials at an average cost per pound of $7.00 and 1,160 direct labor hours at an average wage of $17.50 per hour.
The direct labor efficiency variance during September is ________.
A.
$100 unfavorable
B.
$700 unfavorable
C.
$600 favorable
D.
$680 favorable
Explanation / Answer
1) Direct labour efficiency variance = (Actual Hour-Standard Hour)*Standard Rate = (1160-1200)*17 = 680 Favourable.
Standard Hour = Unit produced X labour hr per unit = 2000x.6=1200 hrs
The answer is D. 680 Favourable