Question: Labor rate variance is the difference between the actual labor rate and the applied overhead rate (standard rate multiplied by the number of actual hours

Labor rate variance is the difference between the actual labor rate and the applied overhead rate (standard rate multiplied by the number of actual hours worked). Consider this and respond to the following: "Our workers are all under labor contracts. Therefore, our labor rate variance is bound to be zero." Do you agree or disagree that the labor rate variance will be zero if all workers are under labor contracts? Explain giving reasons.

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