Final answer:
A favorable labor efficiency variance typically leads to a favorable variable overhead efficiency variance since fewer labor hours than expected were used, resulting in lower consumption of variable overhead.
Step-by-step explanation:
If variable manufacturing overhead is applied to products on the basis of standard direct labor-hours, the impact of a labor efficiency variance on the variable overhead efficiency variance can be understood as follows: If there is a favorable labor efficiency variance, meaning that the actual labor hours used were less than the standard hours expected for the level of output achieved, this typically indicates that workers took less time than anticipated to produce the units.
Given that variable costs, such as labor, increase or decrease with output, and the fact that variable manufacturing overhead is applied based on labor hours, a favorable labor efficiency variance will usually result in a favorable variable overhead efficiency variance. This occurs because the company used fewer labor hours, thereby consuming less variable overhead than expected for that level of production.