The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows:
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Standard Costs @ 2,500 units:
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Direct materials
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2,500 kilograms @ $8/kg
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Direct labor
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7,500 hours @ $12/hr
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Actual Costs @ 2,500 units:
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Direct materials
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2,600 kilograms @ $8.75
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Direct labor
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7,400 hours @ $11.40
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The labor efficiency (quantity) variance is:
1. $5,640 favorable
2. $4,500 favorable
3. $4,440 favorable
4. $1,200 favorable
5. $1,140 favorable