Final answer:
A favorable variable OH efficiency variance might arise from decreased machine hours used, improved machine productivity, or higher labor productivity, which lead to more efficient use of resources and reduced costs.
Step-by-step explanation:
When considering variable manufacturing overhead (OH) efficiency variance, several factors can result in a favorable variance. Three possible reasons for a favorable variable OH efficiency variance could be:
- Decreased machine hours used: If fewer machine hours are utilized than planned for a given level of production, this could indicate that production processes are more efficient, leading to a favorable variance.
- Improved machine productivity: Enhancements in the efficiency of the machines used in production can result in higher output without additional costs, thus creating a favorable variance.
- Labor productivity improvements: If labor can operate machines more effectively, it may reduce the overall machine hours required for production.
B) Decreased machine hours used and C) Improved machine productivity are clear contributors to a favorable variance. These improvements suggest that the company is getting more out of its resources, which could be due to several reasons, such as better training for workers, higher quality raw materials, or more efficient production technology. In the context of production technology and costs, choosing a technology that minimizes total costs, such as production technology 3 in the reference, aligns with the concept of improving efficiency and productivity to reduce variable OH costs.