Question

Which of the following would produce an unfavorable labor rate variance?a. Excessive number of hours worked in completing a job. b. Poor quality materials causing breakage and work interruptions. c. An unfavorable variable overhead spending variance. d. Use of persons with high hourly wage rates in tasks that call for low hourly wage rates.

Answer 1

The correct answer is d. Use of persons with high hourly wage rates in tasks that call for low hourly wage rates.

Step-by-step explanation:

The estimate of the standard for labor directly related to the process, must specifically determine a standard rate that is in accordance with production needs in order to guarantee a profit margin that benefits the final buyer. A situation of high wages will negatively impact the variation of the workforce, since the production needs must be adjusted on a scale according to the behavior of the competitors and always considering rationalizing resources (working with what is necessary and eliminating idleness).