A review of skilled engineering labor rates and variances at Kumisomo Industries revealed the following: Actual wage per hour was ¥15,000, as opposed to ¥13,000 planned. Actual labor hours per unit produced were 1.2 compared with 1.4 hours planned. If during a period 1,000 units were produced, which of the following is false?
A)The DL wage rate variance is unfavorable.
B)The DL wage rate variance is ¥2,400 favorable
C)The DL efficiency variance is ¥26,000 favorable
D)The DL efficiency variance may be random
E)None of the above is false

Question

Quizplus · Accepted Answer

The DL wage rate variance is calculated as (Actual wage rate - Planned wage rate) x Actual hours worked. Since the actual wage rate is higher than planned, the variance is unfavorable, not favorable.

A Review of Skilled Engineering Labor Rates and Variances at Kumisomo