If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:

A) the actual variable overhead rate exceeded the standard rate.
B) the standard variable overhead rate exceeded the actual rate.
C) the actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output.
D) the standard direct labor-hours allowed for the actual output exceeded the actual hours.

Variable Manufacturing Overhead

Costs in manufacturing that vary with the level of production output, such as electricity for machinery.

Variable Overhead Rate Variance

The difference between the actual variable overhead cost incurred during a period and the standard cost that should have been incurred based on the actual activity of the period.

Direct Labor-Hours

A measure of the total hours worked by employees directly involved in manufacturing a product or providing a service.