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How would a very large Favourable Fixed Overhead Flexible Budget variance cause an unfavourable Labour Efficiency...

How would a very large Favourable Fixed Overhead Flexible Budget variance cause an unfavourable Labour Efficiency Variance and a unfavourable Material Efficiency Variance

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Answer #1

A favorable variance occurs when the cost to produce something is less than the budgeted cost. It means a business is making more profit than originally anticipated. Favorable variances could be the result of increased efficiencies in manufacturing, cheaper material costs, or increased sales.

Faverable Fixed Overhead Budget variances Could caused by spending the in excuss than budget and changes in the production volume.

Causes of Labour Unfaverable efficency variances:

  • Poor Supervision and workforce
  • Workforces mixes can have an impact upon Labour efficency levals
  • Resources shortages causing an unexpected delay and lowering of labour efficency levals

Causes of an unfaverable Material efficency Variances:

  • poor Inspection
  • changes in the production/design
  • careless way of handeling material by production department.
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