If the standard quantity allowed for direct labor is less than the actual quantity used, the efficiency variance is favorable.

Question

Quizplus · Accepted Answer

If the standard quantity allowed for direct labor is less than the actual quantity used, it means that more labor was used than planned or budgeted, which results in an unfavorable efficiency variance. A favorable efficiency variance occurs when less labor than expected was used to achieve the same level of output.

If the Standard Quantity Allowed for Direct Labor Is Less