A company may experience a favorable labor rate variance but an unfavorable labor efficiency variance when:
A)Sales lagged behind the budgeted amounts of the sales department.
B)There were breakdowns in machinery.
C)The product mix changed during the period.
D)The company experienced a high amount of turnover in its workforce.

Question

Quizplus · Accepted Answer

A favorable labor rate variance occurs when the actual wage rate paid is less than the standard rate, often due to hiring less experienced workers at lower wages. However, these less experienced workers may not work as efficiently, leading to an unfavorable labor efficiency variance. High turnover can result in hiring new, less experienced workers, causing this situation.

A Company May Experience a Favorable Labor Rate Variance but an Unfavorable