Which of the following is true regarding direct labor variances?
A) The labor efficiency variance measures the difference between what was paid to direct laborers and what should have been paid.
B) The labor rate and labor efficiency variances will always add up to the total labor variance.
C) The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that should have been used.
D) The labor rate variance measures the difference between the labor hours that were originally budgeted and the labor hours that should have been used.
E) The labor rate variance measures the difference between the labor hours that were actually used and the labor hours that were originally budgeted.

Question

Quizplus · Accepted Answer

The labor rate variance measures the difference between the actual rate paid to direct laborers and the standard rate, while the labor efficiency variance measures the difference between the actual hours worked and the standard hours allowed. These two variances will always add up to the total labor variance. Therefore, option B is correct. Option A and C are incorrect because they do not correctly define the labor variances. Option D and E are incorrect because they are not true regarding the labor rate variance.

Which of the Following Is True Regarding Direct Labor Variances