Smithville Uses Labour Hours to Apply Variable Overhead to Production

question 31

Multiple Choice

Smithville uses labour hours to apply variable overhead to production. If the company's workers were very inefficient during the period, which of the following statements would be true about the variable-overhead efficiency variance?

• A)The variance would be favourable.
• B)The variance would be unfavourable.
• C)The nature of the variance (favourable or unfavourable) would be unknown based on the facts presented.
• D)The variance would be the same amount as the labour efficiency variance.
• E)The variance would be the same amount as the fixed overhead volume variance.

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