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Holiday Foods is famous for its frosted fruit cake. The main ingredient of the cake is dried fruit, which Holiday purchases by the pound. In addition, the production requires a certain amount of direct labor. Holiday uses a standard cost system, and at the end of the first quarter, there was a favorable direct labor efficiency variance. Which of the following is a logical explanation for that variance?
A) The factory lost two experienced workers at the beginning of the quarter, and their replacements wasted a large amount of direct materials during their training period.
B) The purchasing manager was able to secure a volume discount on dried fruit, purchasing the fruit for less than the amount set by standard.
C) The cost of workers' medical insurance plans jumped up dramatically during the quarter.
D) The production staff changed the work flow process so that production required fewer direct labor hours.
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Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
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7 years ago
This was certainly a tough question, loving the expertise
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