Which variance measures the efficiency of labor compared to the standard?

The correct choice focuses on the direct labor efficiency variance, which is specifically designed to assess how effectively labor is utilized in the production process compared to established standards. This variance evaluates the difference between the actual hours worked and the standard hours expected for the actual level of production, multiplied by the standard labor rate.

By measuring the efficiency of labor, this variance highlights whether more or fewer hours were used to produce a given quantity of output than anticipated. If more hours were utilized than the standard set for that level of production, it indicates inefficiency, while fewer hours suggest efficiency.

Understanding this variance is crucial for managers as it can provide insights into workforce productivity, identify training needs, and enhance resource management. It also helps in determining whether operational issues are at play that might require intervention to improve efficiency.

Meanwhile, the options related to labor rate variance, direct material price variance, and variable overhead rate variance address different aspects of cost management: labor rate variance assesses the difference in labor costs per hour, material price variance reflects discrepancies in material costs, and variable overhead rate variance involves overhead costs associated with production. While all have their relevance, they do not specifically measure the efficiency of labor in the same manner as the direct labor efficiency variance does.