Concept explainers
Concept Introduction:
Direct labor rate variance-
Direct labor rate variance is the variance which measures the difference between standard rate and actual hourly rate paid.. If actual rate paid is more than the standard rate then the variance is unfavorable and if actual rate paid is less than the standard rate then the variance is favorable. It is calculated as follows-
Direct labor efficiency variance-
Direct labor efficiency variance is the variance which measures the difference between standard hours allowed and actual hours taken for the work done. If actual hours are more than the standard hours allowed then the variance is unfavorable and if actual hours are less than the standard hours allowed then the variance is favorable. It is calculated as follows-
To compute:
Direct labor rate variance and direct labor efficiency variance
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