Which of the Following Is True Regarding Direct Labor Variances

question 78

Multiple Choice

Which of the following is true regarding direct labor variances?

• A) The labor efficiency variance measures the difference between what was paid to direct laborers and what should have been paid.
• B) The labor rate and labor efficiency variances will always add up to the total labor variance.
• C) The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that should have been used.
• D) The labor rate variance measures the difference between the labor hours that were originally budgeted and the labor hours that should have been used.
• E) The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that were originally budgeted.

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Definitions:

Adjusting Entry

An accounting record made to update the balances of accounts at the end of an accounting period before the preparation of financial statements.

Sales

Transactions involving the transfer of goods or services from a seller to a buyer in exchange for money or other considerations.

Days' Sales in Receivable

A financial metric that calculates the average number of days it takes for a company to collect payments after a sale has been made.

Financial Records

Documents that capture all financial transactions of a business or individual, including income, expenses, assets, and liabilities.