A labor efficiency (usage) variance is most likely to occur if:
A) Employees are paid at an overtime wage rate.
B) Employees are inefficient and units must be reworked.
C) Labor cost per unit exceeds materials costs per unit.
D) Employee turnover rates are low.

Question

Quizplus · Accepted Answer

Labor efficiency variance is the difference between the actual hours used and the standard hours allowed, multiplied by the standard rate per hour. It occurs when employees are inefficient, and units must be reworked. This variance can happen due to various reasons like inadequate training, low morale, poor supervision, or outdated equipment. The other options mentioned are not directly related to labor efficiency variance.

A Labor Efficiency (Usage) Variance Is Most Likely to Occur