Question

Answer the following question using the information below:
Diana Industries, Inc. (DII), developed standard costs for direct material and direct labor. In 2010, DII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
Budgeted quantity Budgeted price
Direct materials 0.10 pounds $30 per pound
Direct labor 0.05 hours $15 per hour
During June, DII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct manufacturing labor-hours at an average wage of $15.25 per hour.
Required;
1. June's direct manufacturing labor efficiency variance is:
Group of answer choices:
O $125 favorable
O $7,623.50 unfavorable
O $125 unfavorable
O None of these answers are correct.

Answer 1

Answer:

O None of these answers are correct.

Explanation:

The computation of the direct manufacturing labor efficiency variance is shown below;

= Standard labor rate × (Standard hours for actual output - Actual hours)

where,  

Standard labor rate is $15

Standard hours for actual output would be

= 10,000 containers × 0.05 hours

= 500 hours

And, actual hour is 500 hours

Now put these values to the above formula  

So, the value would equal to  

= $15 × (500 hours - 500 hours)

= $0