Johnsen Company reported a flexible budget variance for direct labor of $8,000 Favorable for the current year.If the direct labor price variance was $2,000 Unfavorable,what was the direct labor efficiency variance?
A) $6,000 Unfavorable
B) $6,000 Favorable
C) $10,000 Favorable
D) $10,000 Unfavorable

Question

Quizplus · Accepted Answer

The flexible budget variance is the sum of the price variance and the efficiency variance. Given a $8,000 Favorable total variance and a $2,000 Unfavorable price variance, the efficiency variance must be $10,000 Favorable to result in the net $8,000 Favorable variance.

Johnsen Company Reported a Flexible Budget Variance for Direct Labor