ExpertEasy2 marksMultiple Choice
ACCA · Question 24 · Standard Costing
Section A
CodeCrafters, a tech startup, set a standard labor rate of $40 per hour. During the month, they hired emergency contract developers, paying $50,000 for 1,000 hours of work. What is the labor rate variance?
Section A
CodeCrafters, a tech startup, set a standard labor rate of $40 per hour. During the month, they hired emergency contract developers, paying $50,000 for 1,000 hours of work. What is the labor rate variance?
Answer options:
A.
$10,000 Favorable
B.
$10,000 Adverse
C.
$40,000 Adverse
D.
$50,000 Adverse
How to approach this question
Compare the actual cost paid for the hours worked against what should have been paid for those hours at the standard rate.
Full Answer
B.$10,000 Adverse✓ Correct
Labor Rate Variance = (Standard Rate - Actual Rate) * Actual Hours. Standard cost for 1,000 hours = $40,000. Actual cost = $50,000. They overpaid by $10,000, resulting in an Adverse variance.
Common mistakes
Confusing rate variance with efficiency variance.
Practice the full ACCA MA — Management Accounting Practice Exam 3
38 questions · hints · full answers · grading
More questions from this exam
Q01Section A
GlobalHealth NGO is evaluating the effectiveness of its recent vaccination drive in ru...EasyQ02Section A
Quantum AI, a tech startup, classifies its costs to better understand cost behavior. S...MediumQ03Section A
MetroWater, a public utility company, uses sampling to test water quality. An automate...EasyQ04Section A
AgriYield Corp is analyzing the relationship between the amount of specialized fertili...MediumQ05Section A
TransGlobal Logistics uses time series analysis to forecast shipping volumes. The unde...Medium