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Unformatted text preview: . It suggests that the company paid too much for one or more of the manufacturing cost elements or that it used the elements inefficiently. If actual costs are less than standard costs, the variance is favorable . A favorable variance has a positive connotation. It suggests efficiencies in incurring manufacturing costs and in using direct materials, direct labor, and manufacturing overhead. However, be careful: A favorable variance could be obtained by using inferior materials. In printing wedding invitations, for example, a favorable variance could result from using an inferior grade of paper. Or, a favorable variance might be achieved in installing tires on an automobile assembly line by tightening only half of the lug bolts. A variance is not favorable if the company has sacrificed quality control standards....
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- Fall '11