A company's production department was experiencing a high defect rate on the assembly line,which was slowing down production and causing wastage of valuable direct materials.The production manager 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 would produce a(n)________.
A) unfavorable direct materials cost variance
B) favorable direct labor cost variance
C) favorable direct labor efficiency variance
D) unfavorable direct materials efficiency variance

Question

Quizplus · Accepted Answer

Hiring highly skilled workers would likely increase the efficiency of labor, leading to a favorable direct labor efficiency variance, as these workers could reduce the defect rate and improve the production process.

A Company's Production Department Was Experiencing a High Defect Rate