At the end of 2010, ELM's production manager estimated direct labor overtime hours at 200 for the first quarter of 2010. At the end of the first quarter, actual overtime hours totaled 180. This difference is most likely to lead to
A) Favorable variable overhead spending variance
B) Unfavorable production volume variance
C) Favorable labor efficiency variance
D) Unfavorable labor efficiency variance

Question

Quizplus · Accepted Answer

The difference in estimated and actual direct labor overtime hours indicates that the actual labor efficiency (hours worked per unit produced) was better than estimated. This leads to a favorable labor efficiency variance.

At the End of 2010, ELM's Production Manager Estimated Direct