The Difference Between Standard Hours and Actual Hours Multiplied by the Standard

question 2

Multiple Choice

The difference between standard hours and actual hours multiplied by the standard rate is the:

• A) Materials quantity variance
• B) Overhead efficiency variance
• C) Labor efficiency variance
• D) Materials price variance

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Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, depreciation, and maintenance expenses.

Predetermined Overhead Rate

A rate calculated at the beginning of the period, used to assign overhead costs to products or services based on a consistent formula.

Direct Labour

The wages paid to workers who are directly involved in the production of goods or the provision of services.

Raw Materials

Raw materials are basic and unprocessed inputs used in the manufacturing of goods.