A company receives an unusually high number of orders in a month. To produce all of the orders within the scheduled dates of delivery, the company pays employees an extra $8 per hour for every hour of overtime the employees work. Which variance would be directly impacted?

Question

Quizplus · Accepted Answer

The labor rate variance measures the difference between the actual labor rate paid per hour and the standard labor rate per hour. The company pays employees an extra $8 per hour for every hour of overtime, which means the actual labor rate paid per hour is higher than the standard labor rate per hour. Therefore, the labor rate variance will be directly impacted by this change.

A Company Receives an Unusually High Number of Orders in a Month