A Favorable Labor Efficiency Variance Would Occur When The

question 58

Multiple Choice

A favorable labor efficiency variance would occur when the:

• A) Actual labor hours are less than the standard labor hours
• B) Standard labor hours are less than the actual labor hours
• C) Standard labor rate is less than the actual labor rate
• D) Actual labor rate is greater than the standard labor rate

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Definitions:

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or sales volume, encompassing items such as rent, salaries, and insurance premiums.

Variable Cost

Costs that change in proportion to the level of activity or volume of production.

Break-Even Point

The level of production or sales at which total costs equal total revenue, resulting in no net profit or loss.

Fixed Costs

Costs that remain constant in total regardless of changes in the level of production or sales volume.