Reference no: EM132710398

Problem 1: 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?