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Understanding Labour Efficiency Variance

Authored by Teresa Toms

Business

12th Grade

Understanding Labour Efficiency Variance
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16 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What formula is used to calculate labor efficiency variance?

Actual Hours Worked x (Actual Rate - Standard Rate)

(Actual Hours Worked - Standard Hours Allowed) x Standard Rate

Standard Hours Allowed x (Actual Rate - Standard Rate)

Actual Hours Worked x Standard Rate

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If the actual hours worked were 1,200 hours, the standard hours allowed for the actual production were 1,000 hours, and the standard rate per hour is $15, what is the labor efficiency variance?

$3,000 Favorable

$3,000 Unfavorable

$2,000 Favorable

$2,000 Unfavorable

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

A favorable labor efficiency variance indicates that:

The actual hours worked were more than the standard hours allowed.

The company paid more in wages than planned.

The actual hours worked were less than the standard hours allowed.

The standard rate per hour was set too high.

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT a common cause of labor efficiency variance?

Inadequate training

Use of outdated machinery

Lower raw material prices

Changes in production methods

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Improving labor efficiency variance can be achieved through:

Increasing the standard hours allowed for production.

Providing better training to employees.

Paying higher wages to workers.

Decreasing the quality of raw materials.

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does a negative labor efficiency variance signify?

The company is operating efficiently.

The actual labor cost was less than the standard labor cost.

The actual labor cost was higher than the standard labor cost.

The standard rate per hour needs to be adjusted.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which factor is likely to cause an unfavorable labor efficiency variance?

Overqualified workforce

High employee morale

Inefficient work processes

Lower-than-expected wage rates

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