Joshwood Slovakia has recently joined Kerikeri Baggage Limited, a sister company of Queenstown Baggage Limited, as a Business Analyst. While going through last year’s variance analysis report, he found that the company uses direct labour hours as the basis for applying variable manufacturing overhead costs. He also found that, last year, the company’s labour efficiency variance was unfavourable. However, he noticed that variable overhead efficiency variance was missing in the last year’s report. Joshwood wonders whether the last year’s variable overhead efficiency variance was favourable or unfavourable. What do you think, and why? [Maximum word limit: 120 words]

Answer rating: 100% (QA)

Variable overhead efficiency Variance would also have been unfavourable becaus... View the full answer