One cause of a flexible budget variance for direct labor may be a difference between standard and actual hourly wage rates for factory workers.

Question

Quizplus · Accepted Answer

A difference between standard and actual hourly wage rates for factory workers can result in a flexible budget variance for direct labor. If the actual hourly wage rate is higher than the standard rate, it will increase the cost of direct labor, resulting in an unfavorable variance. On the other hand, if the actual hourly wage rate is lower than the standard rate, it will decrease the cost of direct labor, resulting in a favorable variance.

One Cause of a Flexible Budget Variance for Direct Labor