Reference no: EM132515792

A company uses the following standard costs to produce a single unit of output.

Direct materials 5 pounds at $0.80 per pound = $ 4.00

Direct labor 0.5 hour at $10.00 per hour = $ 5.00

Manufacturing overhead 0.5 hour at $4.20 per hour = $ 2.10

Question 1: During the latest month, the company purchased and used 47,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $45,505 based on 4,790 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $18,000 and fixed manufacturing overhead incurred was $18,000. Based on this information, the direct labor efficiency variance for the month was:

Multiple Choice

Option 1: $4,495 favorable

Option 2: $2,395 favorable

Option 3: $2,100 unfavorable

Option 4: $2,100 favorable

Option 5: $2,395 unfavorable