A new factory manager was hired for a company that was experiencing slow production rates,and lower production volumes than demanded by management.Upon investigation,the manager found that the workers were poorly motivated and not closely supervised.Midway through the quarter,an incentive program was initiated and cash bonuses were given when workers hit their production targets.Within a short time,production output increased,but the bonuses had to be charged to the direct labor budget,but the manager was worried about the impact of these costs on operating income.This situation could have produced a(n)________.

Question

Quizplus · Accepted Answer

The situation described implies that the introduction of the incentive program had a positive impact on production output, which suggests that the workers were now working more efficiently. However, the bonuses paid to the workers had to be charged to the direct labor budget, which means that the actual cost of direct labor was higher than expected. This could result in an unfavorable direct labor cost variance, as actual costs exceeded the budgeted costs.

A New Factory Manager Was Hired for a Company That