Abita Manufacturing has prepared the following flexible budget for October and it is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.

-The MOST LIKELY explanation of the above direct labor variances is that:
A)the average wage rate paid to employees was less than expected.
B)employees did not work as efficiently as expected to accomplish the job.
C)the company may have assigned more experienced employees this month than originally planned.
D)management may have a problem with budget slack and may be using lax standards for both labor wage rates and expected efficiency.

Question

Abita Manufacturing has prepared the following flexible budget for October and it is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
 
-The MOST LIKELY explanation of the above direct labor variances is that:
A)the average wage rate paid to employees was less than expected. 
B)employees did not work as efficiently as expected to accomplish the job. 
C)the company may have assigned more experienced employees this month than originally planned. 
D)management may have a problem with budget slack and may be using lax standards for both labor wage rates and expected efficiency.

Quizplus · Accepted Answer

The Answer of Abita Manufacturing has prepared the following flexible budget for October and it is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
 
-The MOST LIKELY explanation of the above direct labor variances is that:
A)the average wage rate paid to employees was less than expected. 
B)employees did not work as efficiently as expected to accomplish the job. 
C)the company may have assigned more experienced employees this month than originally planned. 
D)management may have a problem with budget slack and may be using lax standards for both labor wage rates and expected efficiency.

Abita Manufacturing Has Prepared the Following Flexible Budget for October