A New Factory Manager Was Hired for a Company That

question 50

Multiple Choice

A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management.Upon investigation,the manager found that the workers were poorly motivated and not closely supervised.Midway through the quarter,an incentive program was initiated,and cash bonuses were given when workers hit their production targets.Within a short time,production output increased,but the bonuses had to be charged to the direct labor budget.This could produce a(n) ________.

• A) unfavorable direct materials cost variance
• B) unfavorable direct materials efficiency variance
• C) unfavorable direct labor efficiency variance
• D) unfavorable direct labor cost variance

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Definitions:

Fungible Goods

Items that are interchangeable and indistinguishable from one another in terms of quality and characteristics, making them easily replaceable.

Bona Fide Purchaser

A person who purchases property in good faith without notice of any prior claims, liens, or encumbrances.

Buyer in the Ordinary Course of Business

A purchaser who buys goods in good faith, without notice that the sale violates the rights of another party, in the usual and regular course of the seller’s business.

Bailee

An individual or entity that has been given temporary custody but not ownership of someone else's property.