Question

The production manager of a company, in an effort to gain a promotion, negotiated a new labor contract with the factory employees that required them to bear a greater percentage of benefit costs than before, thus bringing down the cost of direct labor to the company. Shortly afterward, several experienced and highly skilled workers resigned, and were replaced by new employees whose work was very slow during their training period. At the end of the quarter, the company's profits fell 10%. This would produce a(n) ________.

Answer 1

Unfavorable Direct labor efficiency variance

Step-by-step explanation:

Labour efficiency is what every organisation look forward to in order to increase output, quality and maximize profit. In this case, all of that dropped maybe as a result of new experience. For this quarter, the organisation have experience Unfavorable Direct Labor Efficiency Variance.