Which of the following situations would most likely

Solution

A Direct Labour Efficiency Variance measures the difference between the actual hours worked and the standard hours allowed for the actual output. A favourable efficiency variance occurs when the actual hours are less than the standard hours (i.e., workers are more productive). Hiring skilled workers typically leads to higher productivity, meaning they complete tasks faster than expected.    A Direct Labour Rate Variance measures the difference between the actual hourly rate paid and the standard rate. An adverse (unfavourable) rate variance occurs when the actual rate paid is higher than the standard rate. Skilled workers generally command higher wages than the standard unskilled or semi-skilled rates, leading to an adverse rate variance.