Which of the following is the most probable reason a company would experience an unfavourable labour rate variance and a favourable labour efficiency variance?
A) The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid, experienced individuals.
B) The mix of workers assigned to the particular job was heavily weighted towards the use of new, relatively low-paid, unskilled workers.
C) Because of the production schedule, workers from other production areas were assigned to assist this particular process.
D) Defective materials caused more labour to be used in order to produce a standard unit.

Question

Quizplus · Accepted Answer

An unfavourable labour rate variance occurs when the actual rate paid is higher than the standard or expected rate, which can happen if a company uses higher-paid, experienced workers. A favourable labour efficiency variance happens when less time is needed to produce a unit than expected, which experienced workers can often achieve due to their higher efficiency and skill levels.

Which of the Following Is the Most Probable Reason a Company