The direct labor flexible budget variance can be divided into two variances:

Question

Quizplus · Accepted Answer

The direct labor flexible budget variance is calculated by comparing the actual direct labor cost with the flexible budget for direct labor cost. This variance can be divided into two variances, namely the rate variance and the efficiency variance. The rate variance is the difference between the actual rate paid and the standard rate multiplied by the actual hours worked. The efficiency variance is the difference between the actual hours worked and the standard hours allowed for the actual production achieved, multiplied by the standard rate. Therefore, the correct option is C, i.e., rate variance and efficiency variance.

The Direct Labor Flexible Budget Variance Can Be Divided into Two