What does a credit balance in a direct labour efficiency variance account indicate?
A) The average wage rate paid to direct labour employees was less than the standard rate.
B) The standard hours allowed for the units produced were greater than actual direct labour hours used.
C) The actual total direct labour costs incurred were less than standard direct labour costs allowed for the units produced.
D) The number of units produced was less than the number of units budgeted for the period.

Question

Quizplus · Accepted Answer

A credit balance in a direct labour efficiency variance account indicates that the standard hours allowed for the units produced were greater than the actual direct labour hours used, meaning that the work was completed in less time than anticipated, which is a favorable efficiency variance.

What Does a Credit Balance in a Direct Labour Efficiency