A company uses the following standard costs to produce a single unit of output.
Direct materials
7 pounds at $1.00 per pound
=
$
7.00
Direct labor
0.3 hour at $8.00 per hour
=
$
2.40
Manufacturing overhead
0.3 hour at $3.30 per hour
=
$
0.99
During the latest month, the company purchased and used 68,000 pounds of direct materials at a price of $1.20 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $20,976 based on 2,760 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $6,900 and fixed manufacturing overhead incurred was $17,000. Based on this information, the direct labor efficiency variance for the month was:
a. $3,024 favorable
b. $1,104 favorable
c. $1,920 unfavorable
d. $1,920 favorable
e. $1,104 unfavorable
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