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.
Labor Rate Standards
The labor rate variance is the difference between the actual labor rate paid and the standard rate, multiplied by the number of actual hours worked. The formula is: Labor rate variance = (Actual rate – Standard rate) x Actual hours worked