Mathematics · Cost Accounting and Variances
A company uses production labour hours to absorb its fixed production overheads. A strike by its workforce results in a loss of 30% of the period's budgeted production labour hours. Which of the following variances occurs directly as a result of this reduction in capacity hours?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Adverse fixed overhead capacity variance✓
- 2Adverse fixed overhead efficiency variance
- 3Adverse direct labour efficiency variance
- 4Adverse direct labour rate variance
Correct answer
Adverse fixed overhead capacity variance
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