The Ending Inventories Budget Is Typically Expressed in Terms of Costs

question 61

True/False

The ending inventories budget is typically expressed in terms of costs, while the production budget is typically expressed in units.

---

Definitions:

Labour Rate Variance

The difference between the actual cost of labor and the budgeted cost, based on hours worked and the rates paid.

Standard Direct Labour Rate

refers to the pre-determined cost per hour for direct labor, used in budgeting and measuring labor cost efficiency.

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain number of units, multiplied by the standard hourly wage rate.

Actual Direct Labour Rate

This measures the actual cost per hour of labor directly involved in the manufacturing process.