If a company that applies variable overhead on the basis of direct labor hours records an unfavorable direct labor efficiency variance, the variable overhead efficiency variance will be
A)unfavorable.
B)favorable.
C)zero.
D)Undeterminable based on the given information.

Question

Quizplus · Accepted Answer

If there is an unfavorable direct labor efficiency variance, it means that the actual direct labor hours spent on production were more than the standard hours allowed. As a result, the variable overhead applied will also be more than the standard variable overhead amount. This leads to an unfavorable variable overhead efficiency variance.

If a Company That Applies Variable Overhead on the Basis