Which of the following is true of direct labor variances? a. The labor efficiency variance measures the difference between what was paid to direct laborers and what should have been paid. b. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that should have been used. c. The labor rate variance measures the difference between the labor hours that were originally budgeted and the labor hours that should have been used. d. The labor rate and labor efficiency variances will always add up to the total labor variance. e. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that were originally budgeted.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Which of the following is true of direct labor variances?
a. The labor efficiency variance measures the difference between what was paid to direct laborers and what should have been paid.
b. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that should have been used.
c. The labor rate variance measures the difference between the labor hours that were originally budgeted and the labor hours that should have been used.
d. The labor rate and labor efficiency variances will always add up to the total labor variance.
e. The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that were originally budgeted.
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