Asked by Kristofer Miller on Jul 09, 2024
Verified
A favourable labour rate variance indicates that:
A) actual hours exceed standard hours.
B) the actual rate exceeds the standard rate.
C) standard hours exceed actual hours.
D) the standard rate exceeds the actual rate.
Labour Rate Variance
The difference between the actual labor costs incurred and the standard labor costs for the actual production level.
Actual Rate
The actual cost incurred or the price paid for materials, labor, or overhead as opposed to budgeted or standard costs.
Standard Rate
A predetermined cost that is often used in budgeting and costing exercises to estimate the expected rate for services or products.
- Itemize variances in material and labor, detailing differences in price, quantity, rate, and efficiency.
Verified Answer
ZK
Zybrea KnightJul 10, 2024
Final Answer :
D
Explanation :
A favourable labour rate variance occurs when the actual rate paid for labour is less than the standard or expected rate, indicating that the company spent less on labour per hour than anticipated.
Learning Objectives
- Itemize variances in material and labor, detailing differences in price, quantity, rate, and efficiency.