If actual direct labor hours (DLHs)are less than standard direct labor hours allowed and overhead is applied on a DLH basis,a(n)
A)favorable variable overhead spending variance exists.
B)favorable variable overhead efficiency variance exists.
C)favorable volume variance exists.
D)unfavorable volume variance exists.

Question

Quizplus · Accepted Answer

A favorable variable overhead efficiency variance exists when actual DLHs are less than standard DLHs allowed. This means that less overhead was incurred than was budgeted for the actual level of production, indicating that the company is using its labor more efficiently than expected. The other choices are not applicable to the given scenario.

If Actual Direct Labor Hours (DLHs)are Less Than Standard Direct