The correct answer is:
$1,120 adverse.
If you selected $1,008 adverse you valued the efficiency variance in hours at the actual variable production overhead rate per hour.
If you selected $1,120 favourable you calculated the correct money value of the variance but you misinterpreted its direction.
If you selected $1,360 adverse you based your calculation on the difference between the original budgeted hours for 520 units and the actual hours worked for 560 units. This is not comparing like with like.
