Answer (B) is correct . The direct materials efficiency variance equals the standard quantity minus the actual quantity, times standard price. The variance is $240,000 favorable {[(10 × 20,000) – 190,000] × $24}. The variance is favorable because the actual quantity was less than the standard quantity allowed for the actual output.
Answer (A) is incorrect because The direct labor rate variance is $156,000 favorable. Answer (C) is incorrect because The variance is favorable. Answer (D) is incorrect because The direct materials price variance is $760,000.
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