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A new factory manager was hired for a company that was experiencing slow production rates and lower ...

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A new factory manager was hired for a company that was experiencing slow production rates and lower ...

A new factory manager was hired for a company that was experiencing slow production rates and lower production volumes than demanded by management. Upon investigation, the manager found that the workers were poorly motivated and not closely supervised. Midway through the quarter, an incentive program was initiated, and cash bonuses were given when workers hit their production targets. Within a short time, production output increased, but the bonuses had to be charged to the direct labor budget, and the manager was worried about the impact of these costs on operating income. This could produce a(n) ________.
A) unfavorable direct materials efficiency variance
B) favorable direct labor cost variance
C) unfavorable direct materials cost variance
D) favorable direct labor efficiency variance

Textbook

Horngren's Financial & Managerial Accounting, The Financial Chapters

Edition: 5^th

Authors: Miller-Nobles, Mattison, Matsumura

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