An Unfavorable Labor Quantity Variance Indicates That the Actual Number

question 237

True/False

An unfavorable labor quantity variance indicates that the actual number of direct labor hours worked was greater than the number of direct labor hours that should have been worked for the output attained.

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Definitions:

Work in Process

Inventory items that are in the production process but are not yet complete.

Predetermined Overhead

An estimated rate used to allocate manufacturing overhead costs to products based on planned activity levels.

Underapplied Overhead

A situation where the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to an underestimation of product costs.

Practical Capacity

The maximum production level that a company can sustain with the current resources and conditions in a realistic manner.