Question

12. The direct labor yield variance is unfavorable when the total hours worked during a period are less than the total standard hours allowed for the actual number of units produced.

True False

Answer 1

The direct labour yield variance is measured as the difference between

1) The product of standard mix, actual hours and standard rate

2) The product of standard mix, standard hours and standard rate

So Labour Yield Variance = standard mix * actual hours * standard rate - standard mix * standard hours * standard rate

= standard mix * standard rate * ( actual hours - standard hours)

So if the total number of hours actually worked is lesser than the standard hours allowed, then the labour yield variance is less or unfavourable.

So the given statement is TRUE.

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