Q5/ What department is usually responsible for a direct labor rate variance? What department is usually responsible for a direct labor efficiency variance? Explain.
Direct labor rate variance shows the difference in hourly wages from standard to direct labor workers. While it is important for workers to know the rate of hourly wages, it is more important for managers to investigate the rate variances because it can help predict the reason for unfavorable rate variance in most cases and explain the favorable variances in some cases. It is true that Human Resources department is responsible for the hiring process and may be assigning the hourly rate for each worker, this is usually done in accordance with the hiring manager, which in our discussion is the production manager. The manager of the production department is responsible for explaining the need for hiring new workers, decide the hourly rate, assign the duties for those workers; as a result, production department has the ability to control the rate variances. …show more content…
Just like labor rate variances, there are favorable variances which can be caused by better quality materials, newly purchased equipment, or hiring an experienced worker. On the other hand, unfavorable variances can result from poor quality materials, old or broken equipment, or undertrained worker. In most cases, it would be the production manager duty to control the labor efficiency variances because it is the manager’s capability to adjust the work conditions with few exceptions, for example, if poor quality materials have resulted in unfavorable efficiency variances, then the purchasing manager would be responsible
Direct labor rate variance shows the difference in hourly wages from standard to direct labor workers. While it is important for workers to know the rate of hourly wages, it is more important for managers to investigate the rate variances because it can help predict the reason for unfavorable rate variance in most cases and explain the favorable variances in some cases. It is true that Human Resources department is responsible for the hiring process and may be assigning the hourly rate for each worker, this is usually done in accordance with the hiring manager, which in our discussion is the production manager. The manager of the production department is responsible for explaining the need for hiring new workers, decide the hourly rate, assign the duties for those workers; as a result, production department has the ability to control the rate variances. …show more content…
Just like labor rate variances, there are favorable variances which can be caused by better quality materials, newly purchased equipment, or hiring an experienced worker. On the other hand, unfavorable variances can result from poor quality materials, old or broken equipment, or undertrained worker. In most cases, it would be the production manager duty to control the labor efficiency variances because it is the manager’s capability to adjust the work conditions with few exceptions, for example, if poor quality materials have resulted in unfavorable efficiency variances, then the purchasing manager would be responsible