The MOST likely explanation of the above direct manufacturing labor variances is that

ACCOUNTING

Multiple Choice

Ruben’s Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.

Flexible ------------Variances-------------

Budget Price Efficiency

Material A $20,000 $1,000F $3,000U

Material B 30,000 500U 1,500F

Direct manufacturing labor 40,000 500U 2,500F



The MOST likely explanation of the above direct manufacturing labor variances is that

a. the average wage rate paid to employees was less than expected

b. employees did not work as efficiently as expected to accomplish the job

c. the company may have assigned more experienced employees this month than originally planned

d. management may have a problem with budget slack and be using lax standards for both labor-wage rates and expected efficiency


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