Hello,

I am having a little bit of difficulty with this type of question. The information below is all that is given to answer the question. From a common-sense standpoint, and from experience with my own budget at work, I would assume the answer is that the labor rate variance is what should be investigated. Is this correct? In addition to helping answer the question, if you can provide some rationale, I would greatly appreciate it! Thank you!

Quotable Notable Manufacturing reported the following variances for the year:

Labor efficiency variance		$5,000 Favorable
Labor rate variance		$2,000 Unfavorable
Overhead controllable variance		$600 Unfavorable
Overhead volume variance		$9,000 Unfavorable

Which one of the variances is the most important to investigate?

Labor efficiency variance

Labor rate variance

Overhead controllable variance

Overhead volume variance