A material usage variance can be caused by labor factors, and a labor efficiency variance can be caused by material quality factors. If employees are new or untrained, an unfavorable labor efficiency variance can result. The untrained employees may also cause more direct material spoilage, which will result in an unfavorable material usage variance. It can work the other way, as well. Knowledgeable and efficient employees can create both a favorable labor efficiency variance and a favorable material usage variance. Furthermore, an unfavorable material usage variance can be caused by inferior materials. The inferior materials that the employees have to work with can also cause an unfavorable labor efficiency variance as well, because it may take longer to produce the product using inferior materials.
It is not likely that a labor efficiency variance and a fixed overhead volume variance would be related. A labor efficiency variance results from a difference between the actual number of labor hours required for the actual output and the standard number of labor hours allowed for the actual output. The fixed overhead volume variance (also called the fixed overhead production-volume variance) is a measure of capacity utilization. It is caused by the actual production level being different from the production level used to calculate the budgeted fixed overhead rate. The labor efficiency variance and the fixed overhead volume variance are not related, and it is very unlikely that one would cause the other.
It is not likely that a material price variance and a variable overhead efficiency variance would be related. A material price variance results from a difference between the actual price per unit of the direct materials used and the budgeted price per unit. The variable overhead efficiency variance is the amount of the total variance caused by a different usage of the allocation base (either direct labor hours or machine hours) than was expected. The material price variance and the variable overhead efficiency variance are not related, and it is very unlikely that one would cause the other.
It is not likely that a labor rate variance and a variable overhead efficiency variance would be related. A labor rate variance results from a difference between the actual hourly rate paid for direct labor used and the budgeted hourly rate. The variable overhead efficiency variance is the amount of the total variance caused by a different usage of the allocation base (either direct labor hours or machine hours) than was expected. Even if direct labor hours are being used as the allocation base, the usage of the allocation base is a quantity variance whereas the labor rate variance is a price variance. The labor rate variance and the variable overhead efficiency variance are not related, and it is very unlikely that one would cause the other.
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