ECONOMICS

Detailed explanation-1: -What Is Unfavorable Variance? Unfavorable variance is an accounting term that describes instances where actual costs are greater than the standard or projected costs. An unfavorable variance can alert management that the company’s profit will be less than expected.

Detailed explanation-2: -What is a Labor Rate Variance? An unfavorable variance means that the cost of labor was more expensive than anticipated, while a favorable variance indicates that the cost of labor was less expensive than planned.

Detailed explanation-3: -If the actual hourly rate is greater than the standard hourly rate, the labor rate variance is labeled unfavorable. A quality standard indicates how much of an input should be used to make a unit of product or provide a unit of service.

Detailed explanation-4: -If actual labor hours are less than the budgeted or standard amount, the variable overhead efficiency variance is favorable; if actual labor hours are more than the budgeted or standard amount, the variance is unfavorable.