The Following Data Relate to Direct Labor Costs for the Current

question 23

Multiple Choice

The following data relate to direct labor costs for the current period: What is the direct labor rate variance?

• A) $2,250 unfavorable
• B) $2,125 unfavorable
• C) $2,250 favorable
• D) $2,125 favorable

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Definitions:

Standard Costs

Pre-determined or estimated costs used for planning and control purposes, often used to measure performance by comparing them with actual costs.

Direct Labour

The wages and other compensation paid to employees who are directly involved in producing goods or providing services.

Labour Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost of labor for the actual production level.

Labour Efficiency Variance

A measure used in accounting to indicate the difference between the actual number of labor hours used and the standard number of hours that should have been used, multiplied by the standard labor rate.