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,and the manager was worried about the impact of these costs on operating income.This could produce a(n)________.
A) unfavorable direct materials cost variance
B) unfavorable direct materials efficiency variance
C) unfavorable direct labor efficiency variance
D) unfavorable direct labor cost variance

Question

Quizplus · Accepted Answer

The cost of the cash bonuses given to workers for hitting their production targets would be charged to the direct labor budget. This would result in an unfavorable direct labor cost variance, as the actual cost of direct labor (including the bonuses) would be higher than the budgeted cost. The other options do not apply to this scenario.

A New Factory Manager Was Hired for a Company That