The correct answer is: D. Rs. 12 (unfavourable)
The direct material cost variance is calculated as follows:
Direct material cost variance = (Actual quantity used – Standard quantity allowed) x Standard price
In this case, the actual quantity used is 12 kg, the standard quantity allowed is 10 kg, and the standard price is Rs. 5 per kg. Therefore, the direct material cost variance is:
Direct material cost variance = (12 kg – 10 kg) x Rs. 5 per kg = Rs. 12 (unfavourable)
This means that the company used 2 kg more material than it was supposed to, and the cost of this extra material is Rs. 12. This variance is unfavourable because it means that the company spent more money on materials than it was supposed to.
The other options are incorrect because they do not take into account the actual and standard quantities used.