An unfavorable labor efficiency 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

An unfavorable labor efficiency variance means that actual labor hours worked were more than the standard labor hours allowed for the units produced. This can happen if there is inefficiency in the workforce, leading to more time being spent on producing each unit than anticipated. Additionally, if units have to be reworked due to errors, this will increase the amount of labor required, causing an unfavorable variance. A, C, and D do not necessarily contribute to an unfavorable labor efficiency variance.

An Unfavorable Labor Efficiency Variance Is Most Likely to Occur