What does an unfavourable labour efficiency variance indicate?
A) The actual labour rate was higher than the standard labour rate.
B) The labour rate variance must also be unfavourable.
C) Actual labour hours worked exceeded standard labour hours for the production level achieved.
D) Overtime labour was used during the perioD.

Question

Quizplus · Accepted Answer

An unfavourable labour efficiency variance means that actual labour hours worked exceeded standard labour hours for the production level achieved. This could be a result of inefficiencies in the production process, poor training of employees, or other operational issues that caused more time to be spent on producing a unit than what was budgeted for. As a result, the company may have incurred additional costs that were not planned for, which can negatively impact profitability.

What Does an Unfavourable Labour Efficiency Variance Indicate