Smithville uses labor hours to apply variable overhead to production.If the company's workers were very inefficient during the period,which of the following statements would be true about the variable-overhead efficiency variance?
A)The variance would be favorable.
B)The variance would be unfavorable.
C)The nature of the variance (favorable or unfavorable)would be unknown based on the facts presented.
D)The variance would be the same amount as the labor efficiency variance.
E)None of thesE.

Question

Quizplus · Accepted Answer

If the workers were inefficient, they would have taken longer to complete the production process, leading to higher labor hours and therefore higher variable overhead costs. This would result in an unfavorable variable-overhead efficiency variance.

Smithville Uses Labor Hours to Apply Variable Overhead to Production