If skilled workers with high hourly rates of pay are given duties that require little skill and call for lower hourly rates of pay, this will result in a favorable labor rate variance. True or False?

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Business

Adrienne

1 March, 17:47

If skilled workers with high hourly rates of pay are given duties that require little skill and call for lower hourly rates of pay, this will result in a favorable labor rate variance. True or False?

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Patrick Casey · Answer 1

True

Explanation:

Favorable labor rate variance is a positive difference between expected and actual costs of labor multiplied by the working hours. On the other hand unfavorable rate variance is a negative difference between the two categories or situation where actual costs are higher than the expected one. In this case actual costs due to lower hourly rates are less expensive than expected costs in the case of higher hourly wages for high skilled workers.