In cost variance analysis, what is the labor rate variance formula?
A(Actual Rate - Standard Rate) * Actual Hours
B(Actual Hours - Standard Hours) * Standard Rate
C(Actual Rate - Standard Rate) * Standard Hours
D(Actual Hours - Standard Hours) * Actual Rate
Explanation
* Labor Rate Variance = (Actual Rate paid per hour – Standard Rate per hour) * Actual Hours worked.
* Favorable if Actual Rate < Standard Rate.
* Evaluates wage rate wage negotiations and labor grade assignment choices.
Exam Relevance
- Topic: Cost Accounting
- Subtopic: Variance Analysis
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