The production manager of a company was experiencing a high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to recruit some highly skilled production workers from another company to bring down the defect rate, but was worried that the higher wages of these workers might negatively affect operating income. This situation would have produced a(n):
A)unfavorable direct materials cost variance.
B)unfavorable direct labor cost variance.
C)unfavorable direct labor efficiency variance.
D)unfavorable direct materials efficiency variance.

Question

Quizplus · Accepted Answer

This situation indicates a potential increase in direct labor costs due to the recruitment of highly skilled workers. Therefore, the most relevant variance to consider is the direct labor cost variance.

The Production Manager of a Company Was Experiencing a High