Question

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will be ___________ (chapter 16) A. favorable B. unfavorable C. either favorable or unfavorable D. zero

Answer 1

Answer:

B. Unfavorable

Explanation:

Variance is use to know the difference between the standard cost which is the budgeted cost and the cost actually incurred and this amount of difference can either be favorable or unfavorable.

The variable overhead efficiency variance is the difference between standard hours for actual output and the actual hours taken at the standard variable overhead rate.

If the direct labor efficiency variance is unfavorable, then variable overhead efficiency variance will also unfavorable because the difference of standard hours for actual production and actual hours will remains the same for both.