The direct labor rate variance arises when
A)Actual wage rates differ from the standard wage rate.
B)Actual hours worked differ from budgeted hours.
C)Standard wage rates do not match last year's rates.
D)Last year's actual hours worked do not match this year's hours worked.

Question

Quizplus · Accepted Answer

Direct labor rate variance occurs when the actual wage rate paid to the workers differs from the standard wage rate set in advance for a given level of productivity. This difference may be due to a change in the wage rates or due to the company hiring workers at different wage rates than the ones anticipated. Therefore, option A is the correct answer. Option B is related to direct labor efficiency variance, option C is not relevant, and option D is not a valid reason for direct labor rate variance.

The Direct Labor Rate Variance Arises When