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 heavyminus−duty plastic container. - Budgeted quantity Budgeted price Direct materials 0.5 pounds $ 20 per pound Direct labor 0.7 hours $ 14 per hour During​ July, GII produced and sold 3,000 containers using 1,800 pounds of direct materials at an average cost per pound of $18 and 2,180 direct manufacturing labor hours at an average wage of $14.50 per hour. The direct manufacturing labor efficiency variance during July is​ ________?

Answer 1

$1,120 unfavorable

Step-by-step explanation:

The formula to compute the direct manufacturing labor efficiency variance is shown below:

= Standard Rate × (Standard hours - Actual hours)

= $14 × ( 2,100 direct labor hours - 2,180 direct labor hours)

= $14 × - 80 direct labor hours

= -$1,120 unfavorable

The standard hours is computed below:

= Number of containers sold × direct labor

= 3,000 × 0.7

= 2,100 direct labor hours