What would be the most likely cause of an unfavorable pay rate variance together with a favorable efficiency (usage) variance? The employment of more highly skilled staff than budgeted Improved efficiency of production
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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What would be the most likely cause of an unfavorable pay rate variance together with a favorable efficiency (usage) variance?
The employment of more highly skilled staff than budgeted
Improved efficiency of production
Poor wage negotiation by top management
Employment of less well-trained staff
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