ELM Corporation Introduced a New Automated Production Process That Has

question 126

Multiple Choice

ELM Corporation introduced a new automated production process that has reduced the amount of labor 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

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Definitions:

Symbolic Characteristics

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Product Line

A group of related products marketed under a single brand name by the same company.

Product Life-cycle

A concept in marketing that describes the stages a new product goes through from introduction to growth, maturity, and decline.