Chapter 21, Problem 3MCQ

To determine

Direct Labor:

Direct labor is that labor which is directly involved with the manufacturing of goods. Labor which is used in administration and other areas is not considered direct labor.

Labor Rate Variance:

Labor rate variance means the difference in amounts of actual and budgeted cost of labor. Labor rate variance is calculated by evaluating the disparity between the actual labor cost and the standard direct labor cost.

To identify: Labor rate variance.