When direct labor is the best cost driver for variable manufacturing overhead, a favorable direct labor efficiency variance would result in:

Question

Quizplus · Accepted Answer

When direct labor is the best cost driver for variable manufacturing overhead, a favorable direct labor efficiency variance indicates that less direct labor was used than anticipated to produce a given level of output. Since direct labor is the best cost driver for variable manufacturing overhead, using less direct labor also means that less of the variable manufacturing overhead cost should have been incurred. Therefore, a favorable direct labor efficiency variance would result in a favorable variable manufacturing overhead efficiency variance.

When Direct Labor Is the Best Cost Driver for Variable