At the end of 20x5, ELM Corporation's production manager estimated direct labour overtime hours at 200 for the first quarter of 20x6. At the end of the first quarter, actual overtime hours totalled 180. This difference is most likely to lead to:
A) Favourable variable overhead spending variance
B) Unfavourable production volume variance
C) Favourable labour efficiency variance
D) Unfavourable labour efficiency variance

Question

Quizplus · Accepted Answer

A lower actual overtime hours than estimated suggests that the company used less labor time than expected, leading to a favourable labour efficiency variance.

At the End of 20x5, ELM Corporation's Production Manager Estimated