If overhead is applied to production using direct labor hours and the direct labor efficiency variance is favorable, then the variable overhead efficiency variance is:
A) favorable.
B) unfavorable.
C) either favorable or unfavorable.
D) neither favorable nor unfavorable.

Question

Quizplus · Accepted Answer

A favorable direct labor efficiency variance indicates that fewer labor hours were used than expected, which would also result in a favorable variable overhead efficiency variance if overhead is applied based on direct labor hours.

If Overhead Is Applied to Production Using Direct Labor Hours