If the actual payment to labor is $1200 and the budgeted rate is $1000, then the labor price variance would be __________?
Correct answer: B. unfavorable
- A. less than zero
- B. unfavorable
- C. favorable
- D. equal to zero
Explanation
Labor price variance compares the actual labor rate with the budgeted rate. Paying $1,200 instead of the budgeted $1,000 creates an unfavorable variance because the actual cost is higher.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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