Accounting Multiple Choice Question – 29 January 2021

The details of direct labour costs are as follows:

1. budget – 48,250 hours at £6.50 per hour
2. actual – 50,000 hours at £7.00 per hour

What is the direct labour rate variance?

Select ONE answer:

1. £4,700 adverse
2. £24,000 adverse
3. £24,000 favourable
4. £28,700 adverse

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – 50,000 hours * (£7.00 – £6.50) ==> £25,000 adverse
4. Not correct

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