Actual direct labor costs may differ from the flexible budget amounts because
A)the company may set a standard wage rate, and the market forces may require a change in that rate.
B)employees may be compensated based on the number of units produced.
C)the labor contract may require a higher wage rate than what the company is paying.
D)employees always operate at the desired efficiency level.

Question

Quizplus · Accepted Answer

Actual direct labor costs may differ from the flexible budget amounts because the company may set a standard wage rate, but market forces can necessitate a change in that rate, leading to variances.

Actual Direct Labor Costs May Differ from the Flexible Budget