A significant and favorable labor rate variance is often linked with a significant and favorable labor efficiency variance.

Question

Quizplus · Accepted Answer

A favorable labor rate variance occurs when the actual rate paid for labor is less than the expected rate, while a favorable labor efficiency variance happens when the actual hours worked are less than the expected hours. These variances are independent; paying less per hour (rate variance) doesn't necessarily mean workers will be more efficient (efficiency variance).

A Significant and Favorable Labor Rate Variance Is Often Linked