direct labour efficiency variance


direct labour efficiency variance
In a standard costing system, a variance arising as part of the direct labour total cost variance. It compares the actual labour time taken to carry out an activity with the standard time allowed and values the difference at the standard direct labour rate per hour. The resultant adverse or favourable variance is the amount by which the budgeted profit is affected by virtue of labour efficiency. The formula for this variance is:
(standard hours allowed for production – actual hours taken) × standard rate per direct labour hour.

Accounting dictionary. 2014.

Look at other dictionaries:

  • Direct labour cost variance — is the difference between the standard cost for actual production and the actual cost in production.[1] There are two kinds of labour variances. Labour Rate Variance is the difference between the standard cost and the actual cost paid for the… …   Wikipedia

  • direct labour total cost variance — The combination of the direct labour rate of pay variance and the direct labour efficiency variance; it compares the actual cost and the standard cost of the direct labour incurred in carrying out the actual production. The formula for this… …   Accounting dictionary

  • labour variances — See: direct labour efficiency variance, direct labour rate of pay variance, direct labour total cost variance …   Accounting dictionary

  • efficiency — A measure of the ability of an organization to produce and distribute its product. In accounting terms it is quantified by a comparison of the standard hours allowed for a given level of production and the actual hours taken. This represents the… …   Accounting dictionary

  • efficiency variances — See: direct labour efficiency variance, overhead efficiency variance …   Accounting dictionary

  • production cost variance — In standard costing, the variance arising when the standard cost of the actual production is compared with the actual cost incurred. If the standard cost is higher than the actual cost a favourable variance arises, while if the actual cost… …   Accounting dictionary

  • production cost variance — In standard costing, the variance arising when the standard cost of the actual production is compared with the actual cost incurred. If the standard cost is higher than the actual cost a favourable variance arises, while if the actual cost… …   Big dictionary of business and management

  • accounting — /euh kown ting/, n. 1. the theory and system of setting up, maintaining, and auditing the books of a firm; art of analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc.… …   Universalium

  • education — /ej oo kay sheuhn/, n. 1. the act or process of imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing oneself or others intellectually for mature life. 2. the act or process of… …   Universalium

  • India — /in dee euh/, n. 1. Hindi, Bharat. a republic in S Asia: a union comprising 25 states and 7 union territories; formerly a British colony; gained independence Aug. 15, 1947; became a republic within the Commonwealth of Nations Jan. 26, 1950.… …   Universalium