A Company Would Most Likely Have an Unfavorable Labor Rate

question 164

Multiple Choice

A company would most likely have an unfavorable labor rate variance and a favorable labor efficiency variance if

• A)the mix of workers used in the production process was more experienced than the normal mix.
• B)the mix of workers used in the production process was less experienced than the normal mix.
• C)workers from another part of the plant were used due to an extra heavy production schedule.
• D)the purchasing agent acquired very high quality material that resulted in less spoilage.

---

Definitions:

Transfer Price

The fee applied to goods or services moved between various sections or units of the same enterprise.

Variable Expenses

Expenditures that adjust in relation to the business's operation level or production quantity.

Shipping Costs

The expenses associated with the delivery of goods from a seller to the buyer, which can include packaging, postage, and handling fees.

Residual Income

The income that remains after deducting all required costs of capital from the operating income.