Direct labor variances are categorized as follows:
● Labor Cost Variance
● Labor Rate of Pay Variance
● Total Labor Efficiency Variance
● Labor Efficiency Variance
● Labor Idle Time Variance
● Labor Mix Variance or Gang Composition Variance
● Labor Yield Variance or Labor Efficiency Sub Variance
● Substitution Variance
| Labor Cost Variance |
| Standard Cost of Labor – Actual Cost of Labor |
| Labor Rate of pay Variance |
| Actual Time taken × (Standard Rate – Actual Rate) |
| Total Labor Efficiency Variance |
| Standard rate × (Standard time – Actual time) |
| Labor Efficiency Variance |
| Standard Rate (Standard time for actual output – Actual time worked) |
| Labor Idle Time Variance |
| Idle Time Variance = Abnormal Idle Time × Standard RateTotal Labor Cost Variance = Labor rate of Pay variance + Total labor Efficiency VarianceTotal Labor Efficiency Variance = Labor Efficiency Variance + Labor Idle Time Variance |
| Labor Mix Variance or Gang Composition Variance |
| If actual composition of labor is equal to standard:LMV = Standard Cost of Standard Composition (for Actual time taken) – Standard Cost of Actual Composition (for Actual time worked)If standard composition of labor revised due to shortage of any specific type of labor but the total actual time is equal to the total standard time:LMV = Standard Cost of Revised Standard Composition (for Actual Time Taken) – Standard Cost of Actual Composition (for Actual Time Worked)If actual and standard time of labor differs:=Total time of actual labor compositionTotal time of standard labor composition × Std.cost of std.composition − Std.cost of actual compositionIn case the Standard is revised and there is a difference in the total Actual and the Standard time:=Total time of actual labor compositionTotal time of revised std.labor composition × Std.cost of (revised std.composition − actual composition) |
| Labor Yield Variance |
| Std. Labor Cost per unit × (Actual Yield In units – Std. Yield in units expected from Actual time worked on production) |
| Substitution Variance |
| (Actual hrs × Std. Rate of Std. Worker) – (Actual hrs × Std.Rate actual worker) |
