One cause of a flexible budget variance for direct labor may be a difference between expected and actual hourly wage rates for factory workers.

Question

Quizplus · Accepted Answer

If the actual hourly wage rate for factory workers is different from the expected rate used in the flexible budget, it can lead to a variance in direct labor costs. This variance can occur even if the number of hours worked by employees is as expected because the wage rate affects the overall cost of direct labor.

One Cause of a Flexible Budget Variance for Direct Labor