ACCA MA · Chapter 13 · Question 10 of 10
Which of the following is the most likely cause of an adverse labour rate variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Using more highly skilled (higher-paid) workers than the standard specifies
Explanation
An adverse rate variance means the average hourly rate paid was higher than standard. Using a higher grade of labour than planned, unplanned pay rises or more overtime premium than expected could all cause this. Lower-grade workers or a smaller wage increase would give a favourable rate variance, and working faster affects efficiency, not rate.
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