Smithville Uses Labor Hours to Apply Variable Overhead to Production

question 71

Multiple Choice

Smithville uses labor 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 favorable.
• B) The variance would be unfavorable.
• C) The nature of the variance (favorable or unfavorable) would be unknown based on the facts presented.
• D) The variance would be the same amount as the labor efficiency variance.
• E) None of the other answers are correct.

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