Asked by Ricardo Ortiz on Jul 21, 2024
Verified
What are some causes of direct labor rate and efficiency variances?
Direct Labor Rate
The cost per hour for direct labor, which includes wages of workers who are directly involved in the production of goods.
Efficiency Variances
Represents the difference between the actual input costs and the standard input costs anticipated for the production achieved.
- Learn the calculation procedures for different kinds of variances, including those related to material, labor, and overhead.
- Acquire knowledge about the factors leading to different variances and how they influence a firm's financial results.
Verified Answer
EM
Ederline MilienJul 28, 2024
Final Answer :
The use of workers with different skill levels might be the main cause of direct labor rate and efficiency variances.The production manager must assign workers to tasks with the appropriate skill level.For instance,using workers with low skill levels might create a favorable rate variance,but an unfavorable efficiency variance.On the other hand,using workers with high skill levels might create an unfavorable rate variance but a favorable efficiency variance.
Learning Objectives
- Learn the calculation procedures for different kinds of variances, including those related to material, labor, and overhead.
- Acquire knowledge about the factors leading to different variances and how they influence a firm's financial results.