ELM introduced a new automated production process that has reduced the amount of labour needed, but not affected the use of materials. The standard cost system has not been changed yet to reflect this new process. Assuming the machinery is functioning properly and that workers were properly trained in its use, which of the following variances is most likely to result?
A) Favorable variable overhead spending variance
B) Favorable direct labor efficiency variance
C) Unfavorable direct labor efficiency variance
D) Favorable direct materials price variance

Question

Quizplus · Accepted Answer

The new automated process reduces labor needs, leading to a favorable direct labor efficiency variance as less labor is used than initially planned.

ELM Introduced a New Automated Production Process That Has Reduced