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When more hours of labor time are necessary to complete a job than the standard allows,...

When more hours of labor time are necessary to complete a job than the standard allows, the labor rate variance is unfavorable. True False
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Answer #1
False.

The labor rate variance is the difference between the actual labor rate paid and the standard rate, multiplied by the number of actual hours worked. The formula is:

(Actual rate - Standard rate) x Actual hours worked = Labor rate variance

Hence favorable when more hours of labor time are necessary to complete a job than the standard allows.

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Answer #2
True.

DL Efficiency Variance = ( SH - AH ) × SR
A positive value of direct labor efficiency variance is obtained when the standard direct labor hours allowed exceeds the actual direct labor hours used. Thus a positive value is favorable. Negative value of direct labor efficiency variance implies that more direct labor hours have been used than actually needed.


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Answer #3
true
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