If the actual labor rate exceeds the standard labor rate and the actual labor hours exceed the number of hours allowed, the labor rate variance and labor efficiency variance will be Labor Rate Labor Efficiency
Variance Variance
A) Favorable Favorable
B) Favorable Unfavorable
C) Unfavorable Favorable
D) Unfavorable Unfavorable

Question

Quizplus · Accepted Answer

When the actual labor rate is higher than the standard, it results in an unfavorable labor rate variance because more is being paid per hour than planned. Similarly, when more hours are worked than allowed, it leads to an unfavorable labor efficiency variance, as it indicates lower efficiency or productivity than expected.

If the Actual Labor Rate Exceeds the Standard Labor Rate