If variable manufacturing overhead is applied based on direct labor hours and there is an unfavorable direct labor efficiency variance
A) the direct materials usage variance will be unfavorable.
B) the direct labor rate variance will be favorable.
C) the variable manufacturing overhead efficiency variance will be unfavorable.
D) the variable manufacturing overhead spending variance will be unfavorable.

Question

Quizplus · Accepted Answer

If there is an unfavorable direct labor efficiency variance, it means that more direct labor hours were used than what was budgeted for the actual output achieved. This means that the variable manufacturing overhead applied based on direct labor hours would have been applied to more hours than budgeted, resulting in an unfavorable variable manufacturing overhead efficiency variance. The other options do not have a direct relationship with the given scenario.

If Variable Manufacturing Overhead Is Applied Based on Direct Labor