The Production Manager of a Company, in an Effort to Gain

question 112

Multiple Choice

The production manager of a company, in an effort to gain a promotion, negotiated a new labor contract with her factory employees that required them to bear a greater percentage of benefit costs than before, thus bringing down the cost of direct labor to the company. Shortly afterward, several experienced and highly skilled workers resigned, and were replaced by new employees whose work was very slow during their training period. At the end of the quarter, the company's profits fell 10%. This situation could have produced which of the following variances?

• A) Unfavorable materials price variance
• B) Favorable labor price variance
• C) Favorable labor efficiency variance
• D) Unfavorable materials efficiency variance

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Definitions:

Tort Law

An area of law that deals with civil wrongs, allowing victims to seek compensation for harm caused by the actions or negligence of others.

Negligent Misstatement

Providing false information carelessly or without reasonable grounds, causing someone else to suffer damage or loss.

Legal Liability

The legal responsibility to compensate for harm caused to another person or property, arising out of one's actions or failures to act.

Negligent Conduct

Behavior that falls below the standard of care expected to protect others from unreasonable risk of harm.