ECONOMICS

Detailed explanation-1: -A debit balance in labor efficiency variance amount indicates that standard hours exceed actual costs. The Production Department should be responsible for material price variances that resulted from purchase of wrong grade of materials.

Detailed explanation-2: -A debit balance in the labor-efficiency variance account indicates that: budget at actual levels of activity reached and fixed overhead applied. The production volume variance is computed by the difference between the: budgeted selling price multiplied by the actual number of units sold.

Detailed explanation-3: -What does a credit balance in a direct labour efficiency variance account indicate? A. the average wage rate paid to direct labour employees was less than the standard rate.

Detailed explanation-4: -The formula for this variance is:(standard hours allowed for production – actual hours taken) × standard rate per direct labour hour.

Detailed explanation-5: -The difference between actual labor hours to standard labor hours required to produce actual output is labor efficiency variance. If the actual labor hours consumed are less than the standard hours allowed is expressed as favorable labor efficiency variance.