A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management.Upon investigation,the manager found that the workers were poorly motivated and not closely supervised.Midway through the quarter,an incentive program was initiated,and cash bonuses were given when workers hit their production targets.Within a short time,production output increased,but the bonuses had to be charged to the direct labor budget.This could produce a(n)________.
A) unfavorable direct materials cost variance
B) unfavorable direct materials efficiency variance
C) unfavorable direct labor efficiency variance
D) unfavorable direct labor cost variance

Question

Quizplus · Accepted Answer

The increase in production output and the cash bonuses given to the workers indicate that the direct labor costs would have increased. Therefore, charging the bonuses to the direct labor budget could produce an unfavorable direct labor cost variance. The other choices are not relevant to the situation described.

A New Factory Manager Was Hired for a Company That