The labor flexible-budget variance equals the labor price variance plus the labor quantity variance.

Question

Quizplus · Accepted Answer

The labor flexible-budget variance is calculated by subtracting the actual labor cost from the flexible budget labor cost. The flexible budget labor cost is calculated using the flexible budgeted labor rate and flexible budgeted labor hours. The labor price variance is the difference between the actual labor rate and the budgeted labor rate, while the labor quantity variance is the difference between the actual labor hours and the budgeted labor hours. Therefore, the labor flexible-budget variance is the sum of the labor price variance and the labor quantity variance.

The Labor Flexible-Budget Variance Equals the Labor Price Variance Plus