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Question - Linis Company produces a commercial cleaning compound known as Zide. The direct materials and direct labor standards for one unit of Zide are as follows:
Standard Qty
Standard Price
Standard Cost
Direct materials
4.6 lbs
P2.50/lb.
P11.50
Direct labor
0.2 hr
P35/hr.
P7.00
During the most recent month, the following activity was recorded:
[a] Twenty thousand pounds of material were purchased at a cost of P2.35 per pound.
[b] All of the materials purchased was used to produce 4,000 units of Zide.
[c] 750 hours of direct labor time were recorded at a total labor cost of P30,375.
Required - Compute the direct labor efficiency variance. Indicate whether favorable or unfavorable.
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