Question

An unfavorable labor rate variance could most likely result from all of the following except: Multiple Choice Producing at levels of output that exceed normal output levels. Using outdated standard cost figures. Having laborers work excessive overtime hours. Using highly skilled laborers to perform tasks normally performed by unskilled laborers.

Answer 1

The answer is A. Producing at levels of output that exceed normal output levels

Step-by-step explanation:

The labor rate variance is the difference between the actual costs for direct labor and expected or budgeted costs.

It is calculated as difference between the actual labor rate paid

and the budgeted rate, multiplied by the actual hours worked.

Unfavorable labor rate variance is when the budgeted rate exceeds the the actual rate and this can be caused by:

1. employing highly skilled laborers to perform tasks normally performed by unskilled laborers because the highly skilled laborers will charge higher

2. Having excessive overtime for labor. This increases the cost

3. Using old standard cost figures because the cost is not based on the present cost and things must have changed a lot from the past.