In a standard costing system, a variance arising as part of the direct labour total cost variance. It compares the actual rate paid to direct labour for an activity with the standard rate of pay allowed for that activity for the actual hours worked. The resultant adverse or favourable variance is the amount by which the budgeted profit is affected by differences in direct labour rates of pay.
The Direct Labour Total Cost Variance is a key metric used in cost accounting to analyze the difference between the actual cost of direct labour and the standard cost allocated for the production of goods.
Labour variances are a critical measure in cost accounting, used to analyze the difference between the actual labor costs and the standard labor costs. They help in identifying areas where inefficiencies and cost overruns occur.
