The unemployment rate is high in the city in which a company has a factory. The company finds that they are able to pay new employees a lower wage per hour than when the unemployment rate was lower a year ago. Which variance would be directly impacted?

Question

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The labor rate variance would be directly impacted as the company is now able to pay new employees a lower wage per hour than before. The labor rate variance measures the difference between the actual labor rate paid and the standard labor rate set by the company. If the actual labor rate paid is lower than the standard labor rate, there will be a favorable variance.

The Unemployment Rate Is High in the City in Which