the labour efficiency variance measures the ability to utilize labour in accordance with expectations. the...
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The labour efficiency variance measures the ability to utilize labour in accordance with expectations. The variance is useful for spotlighting those areas in the production process that are using more labour hours than anticipated. If the variance outcome is unfavourable, there will likely be a review by industrial engineers to see if the underlying process can be improved to reduce the number of production hours required. If this cannot be done, then the standard number of hours required to produce an item is increased to more closely reflect the actual level of efficiency. The two causes could be inefficiencies in the use of labour or employee absenteeism or turnover
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