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: (CMA adapted)
A) favorable.
B) unfavorable.
C) either favorable or unfavorable.
D) zero.

Question

Quizplus · Accepted Answer

The variable overhead efficiency variance is directly related to the direct labor efficiency variance. If the direct labor efficiency variance is unfavorable, it means more labor hours were used than expected, leading to an unfavorable variable overhead efficiency variance as well.

Variable Manufacturing Overhead Is Applied to Products on the Basis