Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger

Exercise 27

Because the calculation of both variances is based on direct labor hours, a favourable labor efficiency variance implies that
A) the variable overhead efficiency variance will be favorable.
B) the variable overhead efficiency variance will also be unfavorable.
C) there will be no variable overhead efficiency variance.
D) the variable overhead spending variance will be unfavorable.
E) the variable overhead is overapplied.