Labor Efficiency Variance

The labor efficiency variance is the difference between the theoretical amounts of inputs required to produce an item and the standard amount that should have been used, multiplied by the standard labor rate. In manufacturing, efficiency variance can be used to analyze the effectiveness with respect to labor, materials, machine time and other production factors.

Direct Labor Standards

Direct Labor Standards: Learning Objective of the articles: Define and explain “direct labor standards” . How direct labor rate and direct labor efficiency standards are set? Direct labor price and quantity standards are usually expressed in terms of a labor rate and labor hours.