An adverse labour efficiency variance together with a favourable labour rate variance could suggest that? a) The business is paying a higher hourly rate than standard b) More products are being made per hour c) Less labour hours are needed to make the same amount of output
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
An adverse labour efficiency variance together with a favourable labour rate variance could suggest that?
a) The business is paying a higher hourly rate than standard
b) More products are being made per hour
c) Less labour hours are needed to make the same amount of output
d) Less skilled staff are being used in production
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