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.

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) $680 favorable
B) $700 unfavorable
C) $600 favorable
D) $100 unfavorable

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.

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) $680 favorable 
B) $700 unfavorable 
C) $600 favorable 
D) $100 unfavorable

Quizplus · Accepted Answer

Direct labor efficiency variance = [1,160 dlh - (2,000 × 0.60)] × $17.00 = $680 F