Deck 7: Flexible Budgets,variances,and Management Control: I

Question 1

Use the information below to answer the following question(s).
Ames Golf Company used the following data to evaluate their current operating system.The company sells 1 pack of golf balls for $10 per pack.The $10 selling price is also the budgeted selling price.

What is the budgeted operating income for Ames Golf Company?

A)$7,000,000
B)$5,970,000
C)$5,550,000
D)$5,200,000
E)$4,750,000

Answer 1

D

Question 2

Some financial variances show increases in operating income relative to a budgeted or allocated amount,and others show decreases in operating income.Respectively,these variances are

A)budgeted,standard.
B)favourable,unfavourable.
C)standard,budgeted.
D)unfavourable,favourable.
E)fixed,variable.

Answer 2

B

Question 3

Management by exception is the practice of focusing management attention on areas where performance meets expectations.

Answer 3

False

Question 4

A static budget is a budget that can be changed or altered after it is developed.

Question 5

A company uses a static budget approach and the previous management accountant calculated the following information: Fixed costs variance $10,000 U;revenues variance $400,000 F;contribution margin variance $60,000 F.What is the total static-budget variance?

A)$50,000 F
B)$50,000 U
C)$230,000 F
D)$230,000 U
E)$390,000 F

Question 6

A flexible budget is a budget that is developed using budgeted revenue or cost amounts and is not adjusted at the end of the budgeted period.

Question 7

Variances and flexible budgets help managers gain insights into why actual results differ from planned performance.

Question 8

Answer the following question(s)using the information below.
Abernathy Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.

What is the static-budget variance of revenues?

A)$20,000 favourable
B)$20,000 unfavourable
C)$2,000 favourable
D)$2,000 unfavourable
E)$25,000 unfavourable

Question 9

Answer the following question(s)using the information below.
Abernathy Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.

What is the static-budget variance of operating income?

A)$3,800 favourable
B)$1,200 unfavourable
C)$6,200 favourable
D)$6,200 unfavourable
E)$1,200 favourable

Question 10

Use the information below to answer the following question(s).
Ames Golf Company used the following data to evaluate their current operating system.The company sells 1 pack of golf balls for $10 per pack.The $10 selling price is also the budgeted selling price.

What is the actual operating income for Ames Golf Company using the actual results?

A)<$3,360,000>
B)$4,750,000
C)$5,200,000
D)$5,550,000
E)$5,970,000

Question 11

A variance is considered to be

A)the gap between an actual result and a benchmark amount.
B)the required number of inputs for one standard output.
C)the difference between an actual result and a budget amount.
D)the difference between a budgeted amount and a standard amount.
E)a standard.

Question 12

A variance is the difference between the actual result and a budgeted amount.

Question 13

A variance is the difference between the actual cost for the current and previous year.

Question 14

The only difference between the static budget and flexible budget is that the static budget is prepared using planned output.

Question 15

Answer the following question(s)using the information below.
Abernathy Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.

What is the static-budget variance of variable costs?

A)$1,200 favourable
B)$18,800 favourable
C)$20,000 favourable
D)$1,200 unfavourable
E)$18,800 unfavourable

Question 16

Use the information below to answer the following question(s).
Ames Golf Company used the following data to evaluate their current operating system.The company sells 1 pack of golf balls for $10 per pack.The $10 selling price is also the budgeted selling price.

What is the total static budget variance for Ames Golf Company?

A)$650,000 favourable
B)$450,000 unfavourable
C)$400,000 favourable
D)$390,000 unfavourable
E)$350,000 favourable

Question 17

Management by exception is the practice of concentrating on

A)the master budget variances.
B)on areas where performance fails to meet expectations.
C)favourable variances.
D)unfavourable variances.
E)exceptional results.

Question 18

A budget that is adjusted in accordance with changes in actual output is called

A)a balanced budget.
B)a cost budget.
C)a flexible budget.
D)a trial balance budget.
E)a static budget.

Question 19

General Insurance Company had a static budgeted operating income of $4.6 million;however,actual income was $3.0 million.What is the static budget variance of operating income?

A)$1,000,000 favourable
B)$1,000,000 unfavourable
C)$1,600,000 favourable
D)$3,000,000 favourable
E)$1,600,000 unfavourable

Question 20

The type of budget that is based on one level of output,without adjustment for any operational or financial changes is called

A)a balanced budget.
B)a cost budget.
C)a flexible budget.
D)a static budget.
E)a standard budget.

Question 21

Use the information below to answer the following question(s).
Bates Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.

What is the static-budget variance of revenues?

A)$50,000 favourable
B)$50,000 unfavourable
C)$5,000 favourable
D)$5,000 unfavourable
E)$25,000 unfavourable

Question 22

The sales-volume variance is the difference between the flexible-budget amount and the static-budget amount;unit selling prices,unit variable costs,and fixed costs are held constant.

Question 23

Use the information below to answer the following question(s).
Everclean Filter Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and had used a budgeted selling price of $11 per unit.

What is the static-budget variance of revenues?

A)$60,000 favourable
B)$240,000 favourable
C)$240,000 unfavourable
D)$6,000 favourable
E)$6,000 unfavourable

Question 24

The flexible-budget variance may be the result of inaccurate forecasting of units sold.

Question 25

The flexible budget contains

A)budgeted amounts for alternative levels of output.
B)actual amounts for budgeted output.
C)revenue based on budgeted quantity and actual unit price.
D)actual costs for planned output.
E)the difference between flexible and static budget fixed costs.

Question 26

The flexible-budget variance is the difference between the actual results and the flexible-budget amount for the actual levels of the revenue and cost drivers.

Question 27

The flexible-budget variance pertaining to revenues is also called the variance of operating income.

Question 28

A flexible budget enables managers to compute a richer set of variances than a static budget does.

Question 29

A packaging company produces a variety of cardboard boxes in an automated process.Expected production per month is 160,000 units.The required direct materials costs $0.30 per unit.Variable manufacturing overhead costs are $24,000 per month and are allocated based on units of production.Direct labour is budgeted to be $6,400.The company only produces based on customer orders,so all production is considered sold as it is produced.Revenue for the month will be $240,000.What is the budgeted contribution margin per unit?

A)$1.50 per unit
B)$1.31 per unit
C)$1.16 per unit
D)$1.05 per unit
E)$1.01 per unit

Question 30

An unfavourable variance is conclusive evidence of poor performance.

Question 31

Caan Corporation used the following data to evaluate their current operating system.The company sells items for $20 each and used a budgeted selling price of $20 per unit.

Required:
Prepare a Level 1 static-budget variance analysis using a income statement in contribution margin format.Use the following three column headings: Actual Results,Static Budget,Static-budget Variance.

Question 32

Determining the actual quantity of the revenue driver is one step in the development of a flexible budget.

Question 33

Use the information below to answer the following question(s).
Bates Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.

What is the static-budget variance of variable costs?

A)$200,000 favourable
B)$50,000 unfavourable
C)$50,000 favourable
D)$250,000 unfavourable
E)$250,000 favourable

Question 34

Decreasing demand for a product may create a favourable sales-volume variance.

Question 35

Use the information below to answer the following question(s).
Everclean Filter Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and had used a budgeted selling price of $11 per unit.

What is the static-budget variance of operating income?

A)$258,000 unfavourable
B)$258,000 favourable
C)$222,000 favourable
D)$222,000 unfavourable
E)$3,000 unfavourable

Question 36

Use the information below to answer the following question(s).
Bates Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.

What is the static-budget variance of operating income?

A)$175,000 favourable
B)$195,000 unfavourable
C)$225,000 favourable
D)$200,000 unfavourable
E)$200,000 favourable

Question 37

Variances can be expected to vary within some normal limits,so not all variances require further investigation.

Question 38

The sales-volume variance of operating income is a measure of efficiency.

Question 39

The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume
variance.

Question 40

Use the information below to answer the following question(s).
Everclean Filter Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and had used a budgeted selling price of $11 per unit.

What is the static-budget variance of variable costs?

A)$13,000 favourable
B)$13,000 unfavourable
C)$15,000 favourable
D)$15,000 unfavourable
E)$3,000 unfavourable

Question 41

Whistler Table Company manufactures tables for schools.The current year operating budget is based on sales of 20,000 units at $100 per table.Operating income is anticipated to be $120,000.Budgeted variable costs are $64 per unit while fixed costs total $600,000.
Actual income for the year was $2,184,000 on actual sales of 21,000 units.Actual variable costs were $60 per unit and fixed costs totaled $570,000.
Required:
Prepare a Level 2 variance analysis report with both flexible-budget and sales-volume variances.

Question 42

The terms,usage variances and efficiency variances mean the same thing.

Question 43

Use the information below to answer the following question(s).
The following data for a pottery company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per kilogram of clay
Total actual cost: $11,200
Standard cost allowed for units produced was $12,000
Materials efficiency variance was $240 unfavourable
Direct Manufacturing Labour:
Standard cost is 2 pots per hour at $24.00 per hour
Actual cost per hour was $24.50
Actual labour was 972 hours
What is the direct materials rate variance for the clay pots?

A)$560 unfavourable
B)$560 favourable
C)$800 unfavourable
D)$800 favourable
E)$1,040 favourable

Question 44

The flexible-budget variance measures

A)what the costs and revenues should have been for the budgeted number of outputs.
B)the difference between budgeted expenditures and actual expenditures for the budgeted number of outputs.
C)the difference between budgeted and actual variable costs.
D)[expected expenditures for the actual number of outputs] + [the actual expenditures for the actual number of outputs].
E)[actual cost for the actual level of the revenue or cost driver] - [budget unit amount × the actual level of the revenue or cost driver].

Question 45

Bach Table Company manufactures tables for schools.The current year operating budget is based on sales of 40,000 units at $50 per table.Operating income is anticipated to be $300,000.Budgeted variable costs are $30 per unit,while fixed costs total $500,000.
Actual income for the year was a surprising $2,268,000 on actual sales of 42,000 units.Actual variable costs were $33 per unit and fixed costs totaled $550,000.
Required:
Prepare a Level 2 variance analysis report with both flexible-budget and sales-volume variances.

Question 46

Use the information below to answer the following question(s).
The following data for a pottery company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per kilogram of clay
Total actual cost: $11,200
Standard cost allowed for units produced was $12,000
Materials efficiency variance was $240 unfavourable
Direct Manufacturing Labour:
Standard cost is 2 pots per hour at $24.00 per hour
Actual cost per hour was $24.50
Actual labour was 972 hours
What is the direct manufacturing labour efficiency variance?

A)$672 unfavourable
B)$500 favourable
C)$672 favourable
D)$500 unfavourable
E)$28 favourable

Question 47

A packaging company produces cardboard boxes in an automated process.The required direct materials costs $0.30 per unit.Fixed manufacturing overhead costs are budgeted at $24,000 per month and are allocated based on units of production.The budgeted contribution margin per unit is $0.85,and administration fixed costs are budgeted at $7,500 per month.What is the flexible-budget amount for operating income for 40,000 and 20,000 units,respectively?

A)$26,000;$20,000
B)$36,000;$30,000
C)$40,000;$34,000
D)$44,000;$38,000
E)$2,500;<$14,500>

Question 48

Use the following data to prepare a flexible budget for possible sales/production levels of 10,000;11,000;and,12,000 units.Show the contribution margin at each activity level.

Question 49

For any actual level of output,the efficiency variance is the difference between actual quantity of input used and the budgeted quantity of input allowed to produce actual output,multiplied by the budgeted price.

Question 50

If a company has a favourable efficiency variance,it uses less inputs than were budgeted for the output units achieved.

Question 51

Use the information below to answer the following question(s).
The following data for a pottery company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per kilogram of clay
Total actual cost: $11,200
Standard cost allowed for units produced was $12,000
Materials efficiency variance was $240 unfavourable
Direct Manufacturing Labour:
Standard cost is 2 pots per hour at $24.00 per hour
Actual cost per hour was $24.50
Actual labour was 972 hours
What is the standard direct material amount per pot?

A)1.00 kilogram
B)1.88 kilograms
C)2.12 kilograms
D)3.00 kilograms
E)4.00 kilograms

Question 52

Describe the purpose of variance analysis.

Question 53

The term efficiency variance is the direct cost portion of the flexible-budget variance.

Question 54

An input-price variance is the difference between actual quantity of input used and the budgeted quantity of input that should have been used,multiplied by the budgeted price.

Question 55

Use the information below to answer the following question(s).
The following data for a pottery company pertain to the production of 2,000 clay pots during July.
Direct Materials (all materials purchased were used):
Standard cost: $6.00 per kilogram of clay
Total actual cost: $11,200
Standard cost allowed for units produced was $12,000
Materials efficiency variance was $240 unfavourable
Direct Manufacturing Labour:
Standard cost is 2 pots per hour at $24.00 per hour
Actual cost per hour was $24.50
Actual labour was 972 hours
What is the direct manufacturing labour rate variance?

A)$186 favourable
B)$486 unfavourable
C)$486 favourable
D)$672 unfavourable
E)$672 favourable

Question 56

A flexible-budget variance can be decomposed into an efficiency variance and a rate variance.

Question 57

Rate variances are the difference between actual inputs used and budgeted inputs that should have been used,multiplied by the budgeted price.

Question 58

Nicholas Company manufacturers TVs.Some of the company's data was misplaced.Use the
following information to replace the lost data:

Required:
a.What are the respective flexible-budget revenues (A)?
b.What are the static-budget revenues (B)?
c.What are the actual variable costs (C)?
d.What is the total flexible-budget variance (D)?
e.What is the total sales-volume variance (E)?
f.What is the total static-budget variance?

Question 59

Explain the difference between a static budget and a flexible budget.Explain what is meant by a static
budget variance and a flexible budget variance.

Question 60

Rate variances are considered to be the difference between the actual price and the budgeted price multiplied by the actual quantity of input goods or services.

Question 61

Use the information below to answer the following question(s).
All Good Things Ltd.planned on producing 600 units for the year.However,actual production was 400 units.
Information concerning the direct labour cost for All Good Things Ltd.is as follows: actual results 1,000 hours at $25 per hour;static budget amounts were 1,200 hours at $21 per hour.
What is the All Good Things Ltd.direct labour input-efficiency variance?

A)$4,200 U
B)$4,200 F
C)$5,000 U
D)$5,000 F
E)$200 U

Question 62

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors.The company uses the following direct cost categories:
Actual performance for the company is shown below:
Actual output: 5,000 units
Direct Materials:
Direct Manufacturing Labour:
Direct Marketing Labour:

What are the efficiency variances for direct manufacturing labour and direct marketing labour,respectively?

A)$25,000 favourable;$18,400 favourable
B)$23,750 favourable;$12,650 unfavourable
C)$25,000 unfavourable;$18,400 unfavourable
D)$23,750 unfavourable;$12,650 unfavourable
E)$23,750 favourable;$12,650 favourable

Question 63

Use the information below to answer the following question(s).
All Good Things Ltd.planned on producing 600 units for the year.However,actual production was 400 units.
Information concerning the direct labour cost for All Good Things Ltd.is as follows: actual results 1,000 hours at $25 per hour;static budget amounts were 1,200 hours at $21 per hour.
What is the All Good Things Ltd.static-budget variance?

A)$400 F
B)$400 U
C)$600 F
D)$200 F
E)$200 U

Question 64

Use the information below to answer the following question(s).
Robb Industries Inc.(RII),developed standard costs for direct material and direct labour.In 2016,RII estimated the following standard costs for one of their major products,the 10-litre plastic container.
During June 2017,RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
June's direct manufacturing labour efficiency variance is

A)$62.50 unfavourable.
B)$62.50 favourable.
C)$128.00 unfavourable.
D)$128.00 favourable.
E)neither favourable nor unfavourable.

Question 65

Use the information below to answer the following question(s).
Robb Industries Inc.(RII),developed standard costs for direct material and direct labour.In 2016,RII estimated the following standard costs for one of their major products,the 10-litre plastic container.
During June 2017,RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
June's direct manufacturing labour rate variance is

A)neither favourable or unfavourable.
B)$62.50 favourable.
C)$128.00 unfavourable.
D)$62.50 unfavourable.
E)$128.00 favourable.

Question 66

Use the information below to answer the following question(s).
Robb Industries Inc.(RII),developed standard costs for direct material and direct labour.In 2016,RII estimated the following standard costs for one of their major products,the 10-litre plastic container.
During June 2017,RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
June's direct material rate variance is

A)$980 unfavourable.
B)$1,000 favourable.
C)$680 favourable.
D)$980 favourable.
E)$1,000 unfavourable.

Question 67

For any actual level of output,the difference between the input that was actually used and the input should have been used is

A)an effectiveness variance.
B)a purchase cost variance.
C)the variance rate.
D)a rate variance.
E)an efficiency variance.

Question 68

Use the information below to answer the following question(s).
All Good Things Ltd.planned on producing 600 units for the year.However,actual production was 400 units.
Information concerning the direct labour cost for All Good Things Ltd.is as follows: actual results 1,000 hours at $25 per hour;static budget amounts were 1,200 hours at $21 per hour.
What is the All Good Things Ltd.direct labour rate variance?

A)$4,200 U
B)$4,200 F
C)$200 F
D)$4,000 F
E)$4,000 U

Question 69

Use the information below to answer the following question(s).
Sawyer Industries Inc.(SII),developed standard costs for direct material and direct labour.In 2016,SII estimated the following standard costs for one of their major products,the 30-litre heavy-duty plastic container.
During July 2017,SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
July's direct material rate variance is

A)$2,800 favourable.
B)$2,200 favourable.
C)$5,000 unfavourable.
D)$2,200 unfavourable.
E)$2,000 favourable.

Question 70

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors.The company uses the following direct cost categories:
Actual performance for the company is shown below:
Actual output: 5,000 units
Direct Materials:
Direct Manufacturing Labour:
Direct Marketing Labour:

What is the efficiency variance for direct materials?

A)$47,350 favourable
B)$36,000 unfavourable
C)$36,000 favourable
D)$37,500 unfavourable
E)$23,750 unfavourable

Question 71

Use the information below to answer the following question(s).
A company makes table lamps,for which the following standards have been developed:
During January,production of 100 lamps was expected,but 110 lamps were actually completed.Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram.Direct labour cost for the month was $5,310,and the actual pay per hour was $9.00.
The direct-labour efficiency variance for the month of January is

A)$630 unfavourable.
B)$560 unfavourable.
C)$630 favourable.
D)$560 favourable.
E)$70 favourable.

Question 72

Use the information below to answer the following question(s).
All Good Things Ltd.planned on producing 600 units for the year.However,actual production was 400 units.
Information concerning the direct labour cost for All Good Things Ltd.is as follows: actual results 1,000 hours at $25 per hour;static budget amounts were 1,200 hours at $21 per hour.
What is the All Good Things Ltd.flexible-budget variance?

A)$8,400 F
B)$8,400 U
C)$8,200 U
D)$8,200 F
E)$200 U

Question 73

Use the information below to answer the following question(s).
Sawyer Industries Inc.(SII),developed standard costs for direct material and direct labour.In 2016,SII estimated the following standard costs for one of their major products,the 30-litre heavy-duty plastic container.
During July 2017,SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
July's direct material flexible-budget variance is

A)$2,800 unfavourable.
B)$2,200 favourable.
C)$5,000 unfavourable.
D)$2,200 unfavourable.
E)$2,800 favourable.

Question 74

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors.The company uses the following direct cost categories:
Actual performance for the company is shown below:
Actual output: 5,000 units
Direct Materials:
Direct Manufacturing Labour:
Direct Marketing Labour:

What is the rate variance of the direct materials?

A)$10,000 favourable
B)$11,500 unfavourable
C)$11,500 favourable
D)$10,000 unfavourable
E)$11,000 favourable

Question 75

Use the information below to answer the following question(s).
Robb Industries Inc.(RII),developed standard costs for direct material and direct labour.In 2016,RII estimated the following standard costs for one of their major products,the 10-litre plastic container.
During June 2017,RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
June's direct material flexible-budget variance is

A)$980 unfavourable.
B)$300 favourable.
C)$680 favourable.
D)$980 favourable.
E)$680 unfavourable.

Question 76

Use the information below to answer the following question(s).
A company makes table lamps,for which the following standards have been developed:
During January,production of 100 lamps was expected,but 110 lamps were actually completed.Direct materials purchased and used were 2,100 kilograms at an actual price of $2.20 per kilogram.Direct labour cost for the month was $5,310,and the actual pay per hour was $9.00.
The direct-material rate variance for January is

A)$420 unfavourable.
B)$420 favourable.
C)$400 favourable.
D)$400 unfavourable.
E)$20 favourable.

Question 77

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors.The company uses the following direct cost categories:
Actual performance for the company is shown below:
Actual output: 5,000 units
Direct Materials:
Direct Manufacturing Labour:
Direct Marketing Labour:

What is the combined total of the flexible budget variances?

A)$102,650 unfavourable
B)$99,000 unfavourable
C)$78,500 unfavourable
D)$75,150 favourable
E)$75,150 unfavourable

Question 78

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors.The company uses the following direct cost categories:
Actual performance for the company is shown below:
Actual output: 5,000 units
Direct Materials:
Direct Manufacturing Labour:
Direct Marketing Labour:

What is the rate variance of the direct manufacturing labour,and the direct marketing labour,respectively?

A)$4,750 favourable;$12,500 favourable
B)$8,000 favourable;$10,000 favourable
C)$3,500 unfavourable;$6,750 unfavourable
D)3,500 favourable;$6,750 favourable
E)$4,750 unfavourable;$12,500 unfavourable

Question 79

Use the information below to answer the following question(s).
All Good Things Ltd.planned on producing 600 units for the year.However,actual production was 400 units.
Information concerning the direct labour cost for All Good Things Ltd.is as follows: actual results 1,000 hours at $25 per hour;static budget amounts were 1,200 hours at $21 per hour.
What is the All Good Things Ltd.sales-volume variance?

A)$8,400 F
B)$8,400 U
C)$8,200 U
D)$8,200 F
E)$200 F

Question 80

Use the information below to answer the following question(s).
Robb Industries Inc.(RII),developed standard costs for direct material and direct labour.In 2016,RII estimated the following standard costs for one of their major products,the 10-litre plastic container.
During June 2017,RII produced and sold 5,000 containers using 490 kilograms of direct materials at an average actual cost per kilogram of $32 and 250 direct manufacturing labour-hours at an average actual wage of $15.25 per hour.
June's direct material efficiency variance is

A)$320 unfavourable.
B)$300 favourable.
C)$680 favourable.
D)$300 unfavourable.
E)$320 favourable.