If Variable Manufacturing Overhead Is Applied Based on Direct Labor

question 75

Multiple Choice

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.

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Definitions:

Overhead Volume Variance

A metric used to measure the difference between the budgeted and actual volume of production, affecting the budgeted overhead costs.