Quality Brand Products uses standard costing to manage their direct costs and their overhead costs. Overhead costs are allocated based on direct labor hours. In the first quarter, Quality Brand had an unfavorable efficiency variance for their variable overhead costs. Which of the following scenarios would be a reasonable explanation for that variance?

Question

Quizplus · Accepted Answer

An unfavorable efficiency variance for variable overhead costs indicates that the actual number of direct labor hours used in production was higher than budgeted. This suggests that there may be inefficiencies in the production process, such as longer than expected setup times or slower than expected production speeds, leading to higher variable overhead costs.

Quality Brand Products Uses Standard Costing to Manage Their Direct