A favorable efficiency variance for direct labor indicates that:
A)a lower wage rate than expected was paid for direct labor.
B)a higher wage rate than expected was paid for direct labor.
C)less direct labor hours were used during production than expected for actual output.
D)more direct labor hours were used during production than expected for actual output.

Question

Quizplus · Accepted Answer

A favorable efficiency variance for direct labor means that fewer direct labor hours were used during production than expected for actual output. This indicates that the employees were more efficient than anticipated, which can result in cost savings for the company.

A Favorable Efficiency Variance for Direct Labor Indicates That