1.Rate variance is a part of

Material variance

**Labour variance**

Overhead variance

2.Rate variance arises due to:

**Change in the rate of pay to labours**

Change in the price of materials

Change in the quantity of materials

3.Rate variance is obtained using the following formula:

**Difference in rates x Actual hours worked**

Difference in rates x Standard hours

Difference in rates x Idle Time

4.Favorable rate variance means that:

Actual labor cost is greater than standard cost

**Actual labor cost is less than standard cost**

None of the above.

5.Adverse rate variance might arise due to:

Increase actual cost than anticipated

Incorrect standard was setup

**All of the above.**

6.Overtime to complete the production may lead to:

Adverse material variance

**Adverse rate variance**

Favorable rate variance

7.Increased promotion to higher pay level staff leads to:

Adverse material variance

**Adverse rate variance**

Favorable rate variance

- Standard cost: Labour 20,000 hours @ $2.66 per hour = $53,200/-; Actual cost: Labour 19,866 hours @ $2.84 per hour = 56,420/-. Rate variance will be:

$ 3,576 favorable

$ 3,500 adverse

**$ 3,576 adverse**

9.Rate variance is used to evaluate the performance of human capital:

**True**

False

10.Rate variance is an effective tool to negotiate pay terms with employees and labor union.

**Yes**

No