ECONOMICS

Detailed explanation-1: -It is the difference between the standard cost of labour allowed (as per standard laid down) for the actual output achieved and the actual cost of labour employed. It is also known as wages variance.

Detailed explanation-2: -The difference between the actual wages paid to employees and the standard wages for all hours worked is the labor rate variance.

Detailed explanation-3: -The labor rate variance focuses on the wages paid for labor and is defined as the difference between actual costs for direct labor and budgeted costs based on the standards. The labor efficiency variance focuses on the quantity of labor hours used in production.

Detailed explanation-4: -The quantity variance formula helps calculate differences in hours rather than pay rates: (Actual Hours x Standard Rate)-(Standard Hours x Standard Rate). This formula uses standard hours, which are the expected hours for employees to work.

Detailed explanation-5: -The labor efficiency variance is also known as the direct labor efficiency variance, and may sometimes be called (though less accurately) the labor variance.