Dabney Inc.has a favourable direct labour efficiency variance.Which of the following would be the most likely reason for this variance?
A) The company used lower-paid workers in the production process more than they had expected.
B) Employees took a shorter amount of time to produce the product than expected.
C) The company used a standard direct labour rate that was too low.
D) Employees used less direct materials in the production process than expected.

Question

Quizplus · Accepted Answer

A favourable direct labour efficiency variance means that employees took less time than expected to produce the product. Therefore, option B is the most likely reason for this variance. Option A is incorrect because the use of lower-paid workers does not necessarily result in a favourable efficiency variance. Option C is incorrect because if the standard direct labour rate was too low, it would have resulted in an unfavourable efficiency variance. Option D is incorrect because direct materials usage is measured separately from the direct labour efficiency variance.