Reference: 11-13 The Upton Company Employs a Standard Costing System in Which

Reference: 11-13
The Upton Company employs a standard costing system in which variable overhead is assigned to production on the basis of direct labour hours. Data for the month of February include the following:
Variable manufacturing overhead cost incurred: $48,700
Total variable overhead variance: $300 F
Standard hours allowed for actual production: 7,000
Actual direct labour hours worked: 6,840
-An unfavourable labour efficiency variance indicates that:

A) the actual labour rate was higher than the standard labour rate.
B) actual labour hours worked exceeded standard labour hours for the production level achieved.
C) the labour rate variance must also be unfavourable.
D) overtime labour was used during the period.

Correct Answer:

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