Management of Food and Nutrition Programs and ServicesDifficulty 3/5
Meals produced fall by 12% while labour cost falls by 4%. How should this variance be interpreted?
- AFavourably, because labour spending came in under the budgeted amount
- BUnfavourably, because productivity fell: meals per labour hour declined
- CNeutrally, because both volume and cost moved in the same direction
- DFavourably, because a smaller volume should always reduce labour cost
Show answer and rationale
Correct: B. Labour cost fell proportionally less than volume, so each meal now consumes more labour. Meals per labour hour — the productivity measure — has worsened despite the lower absolute spend.
- A — Spending less while producing far less is not efficiency.
- C — The sizes of the movements differ, which is precisely the finding.
- D — The proportional relationship is what matters, not the direction.