Which of the following is true if the actual labor rate exceeds the standard labor rate...
Which of the following is true if the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed?
| a. |
Materials Usage Variance Unfavorable; Materials Efficiency Variance Favorable |
|
| b. |
Labor Rate Variance Favorable; Labor Efficiency Variance Favorable |
|
| c. |
Labor Rate Variance Unfavorable; Labor Efficiency Variance Unfavorable |
|
| d. |
Materials Usage Variance Favorable; Materials Efficiency Variance Unfavorable |
Homework Answers
answer : c. Labor Rate Variance Unfavorable ; Labor Efficiency Variance Unfavorable
explanation
labor rate variance
1.the following formula is used to calculate the labor rate variance
labor rate variance =( actual rate - standard rate )*actual hours worked
2. it shows the difference between actual amount paid to the workers and standard amount paid to the worker
3. if the actual rate exceeds the standard rate it is Unfavorable variance
labor efficiency variance
1. labor efficiency variance is used to measure the ability to utilize the labor in accordance with expectations .
2. the following formula is used for calculating the labor efficiency variance
labor efficiency variance = (actual hours worked - standard hours )* standard rate
3. if the actual hours worked exceeds the standard hours or number of hours allowed it is unfavorable labor efficiency variance
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