If overhead is applied to production using direct labor hours and the direct labor efficiency variance is favorable,then the variable overhead efficiency variance is
A)favorable.
B)unfavorable.
C)either favorable or unfavorable.
D)neither favorable not unfavorable.

Question

Quizplus · Accepted Answer

If the direct labor efficiency variance is favorable, it means that less labor hours were used than expected to produce the same amount of output. Thus, the variable overhead efficiency variance should also be favorable because less time was spent on production, leading to lower variable overhead costs compared to what was budgeted.

If Overhead Is Applied to Production Using Direct Labor Hours