Using more direct labor hours for units produced than the amount allowed by the standard results in:
A) An unfavorable total labor variance.
B) An unfavorable labor efficiency variance, regardless of the wage rate paid employees.
C) An unfavorable labor efficiency variance only if the wage rate is higher than standard cost allowed.
D) A favorable labor rate variance, because the hourly wage rate is automatically reduced when workers operate less efficiently.

Question

Quizplus · Accepted Answer

Using more direct labor hours for units produced than the amount allowed by the standard results in an unfavorable labor efficiency variance, regardless of the wage rate paid employees. The labor efficiency variance measures the difference between the actual hours worked and the standard hours allowed for the actual work performed. If actual hours worked exceed the standard hours allowed, the variance will be unfavorable, indicating a higher cost of labor than anticipated. This is true regardless of the wage rate paid employees.

Using More Direct Labor Hours for Units Produced Than the Amount