Exam IIA-CIA-Part3 topic 2 question 78 discussion

The answer is actually ‘A’ (1 and 2). Here’s why: An adverse labor rate variance indicates higher labor costs incurred during a period compared with the standard. Causes for adverse labor rate variance include hiring of more skilled labor than anticipated in the standard (this should be reflected in a favorable labor efficiency variance). In this scenario, manager had to hire MORE workers to get the job done – so now he has to pay both the old workers AND the new workers; therefore the labor rate is HIGHER than it should’ve been (and that’s a bad thing). However, because he hired more skilled workers, the job is going to be more efficiently done, so it’s a favorable labor efficiency. So the answer is A, 1 & 2: Favorable labor efficiency, but an adverse labor rate.

I also think it's A. 1 and 2.

Its definitely A.

In Gleim book SU 14 page 19 there is an example for both absorption and variable costing and the direct labour (answer 1), direct materials and variable overhead are considered product costs under variable costing and variable and fixed S&A expenses are period costs. How come D is the correct answer?