Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.

During July, GII produced and sold 4,000 containers using 1,750 pounds of direct materials at an average cost per pound of $48 and 2,090 direct manufacturing labor hours at an average wage of $11.30 per hour.
The direct manufacturing labor efficiency variance during July is ________.
A) $990.00 unfavorable
B) $627.00 favorable
C) $1,617.00 favorable
D) $1,017.00 unfavorable

Question

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.

During July, GII produced and sold 4,000 containers using 1,750 pounds of direct materials at an average cost per pound of $48 and 2,090 direct manufacturing labor hours at an average wage of $11.30 per hour.
The direct manufacturing labor efficiency variance during July is ________.
A) $990.00 unfavorable 
B) $627.00 favorable 
C) $1,617.00 favorable 
D) $1,017.00 unfavorable

Quizplus · Accepted Answer

Direct manufacturing labor efficiency variance = [2,090 dlh - (4,000 × 0.50)] × $11 = $990.00 U