Variable manufacturing overhead is applied to products on the basis of standard direct labour-hours. If the direct labour efficiency variance is unfavourable, the variable overhead efficiency variable will be
A)favourable.
B)unfavourable.
C)either favourable or unfavourable.
D)zero.

Question

Quizplus · Accepted Answer

Variable overhead efficiency variance is a measure of how efficient the company is at using variable overhead costs during production. If the direct labour efficiency variance is unfavourable, it means that the actual labour hours used were more than the standard labour hours allowed. This could result in an increase in the application of variable overhead costs. Therefore, the variable overhead efficiency variance will also be unfavourable.

Variable Manufacturing Overhead Is Applied to Products on the Basis