What Does an Unfavourable Labour Efficiency Variance Indicate

question 141

Multiple Choice

What does an unfavourable labour efficiency variance indicate?

• A) The actual labour rate was higher than the standard labour rate.
• B) The labour rate variance must also be unfavourable.
• C) Actual labour hours worked exceeded standard labour hours for the production level achieved.
• D) Overtime labour was used during the period.

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Definitions:

Convertibles

Convertibles are bonds or preferred stocks that can be converted into a predetermined number of common stock or equity shares.

Coupon Rate

The percentage rate at which a bond's face value accrues interest each year.

Straight Debt

A fixed-income security, such as a bond, that has a predetermined interest rate, maturity, and principal repayment schedule.

Credit Default Swap

A specific type of credit derivative where the underlying reference asset is a credit obligation such as a bond or a bank loan of a specific company. One counterparty (the protection buyer) makes a periodic payment (the credit default swap premium) to the second counterparty (the protection seller). If the underlying reference asset suffers a credit event such as bankruptcy, the protection seller will make a payment to the protection buyer. Credit default swaps allow protection buyers to hedge themselves against credit risk, and protection sellers to invest based on their assessment of credit risk.