If variable manufacturing overhead is applied based on direct labor hours and there is an unfavorable direct labor efficiency variance a. the direct labor rate variance will be favorable. b. the variable manufacturing overhead efficiency variance will be unfavorable. c. the direct materials usage variance will be unfavorable. d. the variable manufacturing overhead spending variance will be unfavorable.

With signals from no-claim bonuses and deductibles, a. the marginal cost curve for careful drivers lies to the left of the marginal cost curve for aggressive drivers b. auto insurance companies insure more aggressive drivers than careful drivers because aggressive drivers have a greater need for the insurance c. the market for car insurance has a separating equilibrium, and the market is efficient d. most drivers pay higher premiums than if the market had no signals