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

Question

Quizplus · Accepted Answer

Direct labour variances always consist of two components: labour rate variance and labour efficiency variance. These two variances are always connected and will add up to the total labour variance. Option A and C are incorrect because the labour rate variance measures the difference between the actual pay rate paid to direct labourers and the standard pay rate or the difference between the actual labour hours used and the standard labour hours, respectively. Option D is incorrect because the labour rate variance compares the actual labour rate to the standard rate, not the original budgeted rate.

Which of the Following Is Characteristic of Direct Labour Variances