If demand is insufficient to keep everyone busy and workers are not laid off, an unfavorable (U) variable overhead efficiency variance often will be a result unless managers build excessive inventories.

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Ashley Spielmann · Accepted Answer

Final Answer : True, Explanation :  If demand is low and workers are not laid off, they may have idle time which can lead to a negative variable overhead efficiency variance. To avoid this, managers may choose to build excess inventory, which can also have negative implications for the business.

If demand is insufficient to keep everyone busy and workers are not laid off, an unfavorable (U) variable overhead efficiency variance often will be a result unless managers build excessive inventories.

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