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A firm allocates manufacturing overhead on the basis of direct labor hours. If the direct labor price (rate) variance is favorable and the labor efficiency

A firm allocates manufacturing overhead on the basis of direct labor hours. If the direct labor price (rate) variance is favorable and the labor efficiency variance is unfavorable, which combination is correct? (Unknown means that it cannot be determined from the facts given whether the variance is favorable or unfavorable.)

Variable overhead spending variance Variable overhead efficiency

A favorable unfavorable

B unknown unfavorable

C favorable unknown

D unknown unknown

C

B

A

D

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