An Unfavorable Efficiency Variance for Direct Manufacturing Labor Might Indicate

question 169

Multiple Choice

An unfavorable efficiency variance for direct manufacturing labor might indicate that ________.

• A) there is unexpected increase in direct labor rates
• B) work is scheduled inefficiently
• C) lower-quality materials were purchased
• D) more higher-skilled workers were scheduled than planned

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Definitions:

Long-run Average Total Cost

The average cost per unit of output produced over a period during which all inputs, including capital, are variable.

Diseconomies of Scale

The situation in which a business experiences an increase in average costs per unit when output is increased beyond a certain point.

Economies of Scale

The economic benefits gained by companies because of their large scale of operation, which typically results in a lower cost per unit of output as the scale increases.

Average Fixed Costs

The total fixed costs associated with production (costs that do not change with output) divided by the quantity of output produced.