Which of the following statements are true? Multiple select question.A favorable labor rate variance is always favorable for a company.How production supervisors use direct labor workers can lead to labor rate variances.Overtime premiums can cause an unfavorable labor rate variance.Assigning highly skilled, highly paid workers to low skill, low pay level jobs will cause a favorable labor rate variance.
Question
Which of the following statements are true? Multiple select question.A favorable labor rate variance is always favorable for a company.How production supervisors use direct labor workers can lead to labor rate variances.Overtime premiums can cause an unfavorable labor rate variance.Assigning highly skilled, highly paid workers to low skill, low pay level jobs will cause a favorable labor rate variance.
Solution
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A favorable labor rate variance is always favorable for a company: This statement is generally true. A favorable labor rate variance means that the actual labor cost was less than the standard or budgeted cost, which is usually beneficial for a company. However, it's important to note that this might not always be the case. For example, if the favorable variance is due to underpayment or overworking of employees, it could lead to low morale and high turnover, which could be detrimental in the long run.
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How production supervisors use direct labor workers can lead to labor rate variances: This statement is true. The efficiency and effectiveness of labor usage by supervisors can significantly impact labor costs. If supervisors are able to manage their workers well, they can minimize idle time, improve productivity, and thus create a favorable labor rate variance.
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Overtime premiums can cause an unfavorable labor rate variance: This statement is true. Overtime work usually comes with a premium pay rate, which increases labor costs. If a company frequently requires its workers to work overtime, it can lead to an unfavorable labor rate variance.
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Assigning highly skilled, highly paid workers to low skill, low pay level jobs will cause a favorable labor rate variance: This statement is false. Assigning highly skilled, highly paid workers to low skill jobs is an inefficient use of labor and will likely lead to an unfavorable labor rate variance. This is because the company is paying a high wage rate for work that could be done at a lower rate.
Similar Questions
Which of the following statement is incorrect?Select one:a. There is a favorable variance when units sold are more than budget.b. An unfavorable variance occurs when it leads to an increase in income.c. A favorable variance occurs when it leads to an increase in incomed. An unfavorable variance occurs when it leads to a decrease in income.
Which of the following statements is true?Multiple choice question.Quantity variances are computed for direct materials, direct labor and fixed overhead.The variance that computes the price difference for materials is called a material rate variance.Price variances can only be computed for direct materials and direct labor.A labor efficiency variance is a quantity variance.
nfavorable labor rate variances may occur as a result of Blank______.Multiple select question.unskilled workers being assigned to a task that requires a set of skillsskilled workers being assigned to jobs requiring little skillwork interruptions caused by faulty equipmentovertime premiums being charged to the direct labor account
Which of the following statements is true?The materials price variance is computed based on the amount of materials purchased during the period.The standard price per unit for direct materials should reflect the final, delivered cost of the materials.In general, the production manager is responsible for the materials price variance.An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.Multiple ChoiceBoth statements 1one and 2 are true.Both statements 2 and 3 are true.All of the statements are true.None of the statements are true.
When the workforce is fixed in the short term, labor efficiency variances Blank______.Multiple choice question.need to be monitored carefullycannot be calculatedmay need to be eliminated
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