Home › US CMA Part 1 › Accounting › Standard Costs and Variances › Paying workers less per hour than the standard r…
Paying workers less per hour than the standard rate produces which variance?
AUnfavorable time variance
BFavorable rate variance
CUnfavorable rate variance
DFavorable time variance
Answer & Solution
Correct answer: B. Favorable rate variance
1. Identify the labour component and the direction.
2. Direct labor may have a variance in the rate paid to workers.
3. It may also have a variance in the amount of time used.
4. Here the rate differs, not the time.
5. Spending less than the standard is favorable, so it is a favorable rate variance.
_Source: OpenStax Principles of Accounting, Volume 2: Managerial Accounting (CC BY-NC-SA 4.0), Ch 8 'Standard Costs and Variances'_
Related questions
Spending exactly the standard amount on materials produces a variance of:A standard cost is described as being developed in order to:Using 10 kilograms of material where the standard allowed 8 produces which variance?Buying cheaper but poorer material that workers waste illustrates that variances can be:Alongside labor efficiency, a favorable material price variance could also cause an unfavoA favorable material price variance is described as possibly causing an unfavorable:An instructor's syllabus is described as one way to communicate expectations to:A syllabus is used as an analogy for which management tool?