The correct answer is B. (1) and (2)
A variable production overhead efficiency variance is the difference between the actual variable production overhead and the standard variable production overhead, multiplied by the standard variable overhead rate. It is caused by a difference between the actual and standard hours worked.
Option 1: Employees were of a lower skill level than specified in the standard. This would cause an adverse variable production overhead efficiency variance because it would take longer to produce the same amount of output, resulting in more actual hours worked than standard hours worked.
Option 2: Unexpected idle time resulted from a series of machine breakdown. This would also cause an adverse variable production overhead efficiency variance because it would result in less actual hours worked than standard hours worked.
Option 3: Poor Quality material was difficult to process. This would not necessarily cause an adverse variable production overhead efficiency variance. It depends on how the company accounts for the cost of poor quality material. If the company does not charge the production department for the cost of poor quality material, then it would not affect the variable production overhead efficiency variance. However, if the company does charge the production department for the cost of poor quality material, then it would increase the actual variable production overhead, which would decrease the variable production overhead efficiency variance.
Therefore, the correct answer is B. (1) and (2).