Suppose a Company's Variable Overhead Is Applied on the Basis

question 147

Multiple Choice

Suppose a company's variable overhead is applied on the basis of direct labour hours, and the company has an unfavourable direct labour efficiency variance. What is most likely to result?

• A) The direct labour rate variance will be favourable.
• B) The direct materials usage variance will be unfavourable.
• C) The variable overhead spending variance will be unfavourable.
• D) The variable overhead efficiency variance will be unfavourable.

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Definitions:

Major Airlines

Refers to the largest and most significant airlines operating in the aviation industry, often recognized by their extensive international and domestic flight operations and substantial fleet size.

Systematic Risk

The risk inherent to the entire market or market segment that cannot be eliminated through diversification.

General Health

A broad term referring to the overall physical and mental condition and well-being of an individual or population.

Unsystematic Risk

The risk of price change due to the unique circumstances of a specific security, as opposed to the overall market.