Reference no: EM133027262

Question - A small local Covid Supply company produces a variety of cloth facemasks in an automated process. Expected production per month is 120,000 units. The company budgets to produce 400 facemasks per direct manufacturing labour hour (DMLH). The budgeted labour rate is $.08 per mask.

Actual direct manufacturing labour was $9,240 with an actual labour rate of $33.00 per hour. Plant utility costs were an additional $.15 per mask. Variable sales and marketing costs were $.10 per unit sold. The company produced 110,000 units based on customer orders, so all production was sold as it was produced.

Required - What is the Rate and Efficiency variance for Direct Manufacturing Labour?

A) Rate Variance $280 F; Efficiency Variance $160 F

B) Rate Variance $280 U; Efficiency Variance $160U

C) Rate Variance $280 U; Efficiency Variance $640 F

D) Rate Variance $280 U; Efficiency Variance $640U

E) None of the other answers.