Reasons of Favorable Efficiency Variance

Reasons of Favorable Efficiency Variance

Reasons of favorable efficiency variance are high skilled labour, effective supervision, working environment, employees’ incentives. These reasons have been explained below;

1.    High Skilled & Experienced Labour

Favorable efficiency variance may result in, by using high skilled & experienced labour. Because such labour will take less time to do the job than standard time, and thus favorable efficiency variance would emerge.

2.    Effective Supervision

Favorable efficiency variance may also result due to supervision & mentoring. Effective supervision would reduce the time wastage by the labour.

3.    Improving Working Environment

Favorable efficiency variance may be obtained by improving the working environment. It is obvious that suitable working environment would improve the efficiency of labour i.e. labour would work more efficiently.

4.    Incentive

Favorable efficacy variance may also result by introducing the different incentive scheme for labour. Such schemes would encouraged the labour to work more efficiently, provided that such scheme should be performance based (efficiency based).