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Direct labor rate variance is caused by a change in the hourly rate from what you initially planned.

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10y ago

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What does a credit balance in a direct labor efficiency variance account indicate?

The average wage rate paid to direct labour employees was less than the standard rate.


The variance which measures the deviation of the rate actually paid to labor as from the standard hourly rate is known as?

Labour rate variance .


Causes material quantity variance?

causes of labor rate variances


What is the Direct labor efficiency variance formula?

(actual time * standard rate) - (standard time * standard rate)


Will the direct labor price variance always be unfavorable if more hours are worked than the standard hours allowed for the actual output attained?

No, Direct labor price variance is created due to difference in standard labor rate and actual labor rate for example standard labor rate per unit is 10 and actual labor rate is 11 then 1 per unit is unfavourable direct labor price variance.


What factors causes Budget Variance?

There are 7 variances associated with a budget ( which are generally calculated for controlling purposes) 1- Material Price variance 2- Material Quantity variance 3- Labor rate variance 4- Labor efficiency variance 5- Spending variance 6- Efficiency variance 7- Capacity variance


What are the two variances between the actual cost and the standard cost for direct labor?

The two variances between the actual cost and the standard cost for direct labor are the labor rate variance and the labor efficiency variance. The labor rate variance measures the difference between the actual hourly wage paid and the standard wage expected, multiplied by the actual hours worked. The labor efficiency variance assesses the difference between the actual hours worked and the standard hours allowed for the actual production, valued at the standard hourly rate. These variances help businesses analyze their labor costs and operational efficiency.


How do you calculate applied overhead?

Many companies will have a 'historical' OVHD rate, or calculate a budgeted rate.Presuming budgeted or est-ovhd cost of 750,000Presuming budgeted or est-direct-labor 500,000Overhead rate = estimated overhead costs/estimated activity base750,000 / 500,000Overhead rate =1.5 or 150%Since job-labor is the basis for Applied Overhead,Applied overhead = rate from above x actual direct labor.1.5 510,000Applied overhead = 765Prorate the overhead variance to the appropriate accounts765 - 750 = variance of 15K


What is rate variance?

Rate variance is a financial metric that measures the difference between the actual rate of expense or revenue and the expected or budgeted rate. It is often used in budgeting and financial analysis to assess performance, helping organizations understand whether they are spending more or less than planned. A positive rate variance indicates that actual results were better than expected, while a negative variance signifies underperformance. This analysis aids in decision-making and resource allocation.


How do you calculate the actual labor rate when the standard rate is not given?

The actual rate is the total dollars divided by total hours or pieces. The actual formula is not dependant on any standard rate. The rate variance, however, cannot be determined without the standard rate. The rate variance is the difference between actual rate and standard rate.


What is labour labour turn over?

labour turn over refers to the rate at which employees join and leave the company


How do you arrive at Machine Hour rate and what can be the assumptions while calculating MHR?

There are many pparameters taken into accont for getting machine hr rate like: Direct labour cost indirect labour cost machine cst(intial) depreciation tool, lubrication, coolant, ...etc and most importantly total m/c hr available