If the Labour Efficiency Variance Is Unfavourable, Then

question 35

Multiple Choice

If the labour efficiency variance is unfavourable, then

• A)actual hours exceeded standard hours allowed for the actual output.
• B)standard hours allowed for the actual output exceeded actual hours.
• C)the standard rate exceeded the actual rate.
• D)the actual rate exceeded the standard rate.

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Definitions:

Fixed Manufacturing Overhead Volume Variance

The difference between budgeted fixed manufacturing overhead and the amount applied to production, based on standard hours.

Standard Direct Labour-Hours

The estimated amount of labor time that should be required to produce one unit of a product.

Fixed Manufacturing Overhead Rate

The rate at which fixed manufacturing overhead costs are allocated to products, typically based on labor hours or machine hours.

Fixed Overhead Budget Variance

The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs.