COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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paying workers higher wages than expected.
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misallocation of workers.
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worker fatigue or carelessness.
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higher pay rates mandated by union contracts.
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Detailed explanation-1: -The Labor Quantity Variance is also known as labor efficiency variance which measures the company’s efficiency in using its labor hours. A worker fatigue and carelessness can lead to an unfavorable labor quantity variance because the actual labor hours will be higher than the standard labor hours set.
Detailed explanation-2: -Answer: c. worker fatigue or carelessness. Unfavorable labor variance may be caused by buying worker fatigue or carelessness. Due to fatigue, workers cannot focus well in producing the product thus, production performance is reduced.
Detailed explanation-3: -An unfavorable labor rate variance arises when the standard price or labor rate is lower than than actual rate incurred. In the same manner, favorable efficiency variance could arise from incurring lower number of actual direct labor hours than the standard hours.
Detailed explanation-4: -Followings are some of the reasons that lead to unfavorable direct labor efficiency difference or variance: The hiring of inexperienced labor leads to unfavorable labor efficiency as it requires a company to spend more on labor and labors take more time in producing goods.