Mid City Products Inc. (MCP), developed standard costs for direct material and d

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

5pounds

$ 2.60$2.60

Direct labor

0.1hours

$ 11$11

During September, MCP produced and sold

2,000 units using 10,300 pounds of direct materials at an average cost per pound of $2 and 190 direct labor hours at an average wage of $11.30 per hour.

The direct material efficiency variance during September is ________.

A.$6,180favorable

B.$6,180unfavorable

C.$780favorable

D.$780unfavorable

Budgeted quantity

Budgeted price

Direct materials

5pounds

$ 2.60$2.60

Direct labor

0.1hours

$ 11$11

Explanation / Answer

The direct material efficiency variance during September is ...........

For Direct material efficiency variance = Standard price (Standard quantity - Actual quantity)

= 2.60 (10000 - 10300) = 2.60 * ( - 300) = 780 unfavorable

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