When more hours of labor time are necessary to complete a job than the standard allows

Full question:

When more hours of labor time are necessary to complete a job than the standard allows the labour efficiency variance is unfavourable. True or false

Answer:

True

Explanation:

The labour efficiency variance is is used to measure the utilization of labour in accordance with plan or expectations. The labour variance is calculated as the difference between the actual labor hours used in production of an item and the standard amount that should have been used as planned multiplied by the standard labor rate. Labour efficiency variance is unfavourable if it does not keep to standard labour amount budgeted or planned for production

True.

Explanation:

The labour efficiency variance is an important tool in the industry (by industrial Engineers), business and accounting. And it can be represented mathematically as below and this representation defines what labour efficiency is.

Labour efficiency variance = modelled labour quantity * (Actual time for labour - modelled time for labour).

During the manufacturing of a particular product, When more hours of labor time are necessary to complete a job than the standard labour rate it means that the labour efficiency variance will be unfavourable and it has to be corrected. When more time is used it in the production than the required time the rate of production will be low which will cause the unfavourable variance.