Problem
The following standards were developed for a product by a manufacturer:
|
|
Standard quantity
|
Standard price or rate
|
|
Direct material
|
8 kilograms
|
$3.5 per kilogram
|
|
Direct labour
|
2 hours
|
$45 per hour
|
During May, the manufacturer purchased 160,000 kilograms of direct material at a total cost of $608,000. The total wages for May were $10,000, 40 per cent of which was direct labour cost. The manufacturer completed 45 products during May, using 400 kilograms of direct material and 90 direct labour hours.
What is the direct labour efficiency variance?
Consider that a negative number means favourable variance and a positive number means unfavourable variance.