ECONOMICS

Detailed explanation-1: -A direct labor cost variance may be broken down into a controllable variance and a volume variance. An analytical technique used by management to focus on the most significant variances and give less attention to the areas where performance is satisfactory is known as: Management by exception.

Detailed explanation-2: -Answer: Similar to direct materials variances, direct labor variance analysis involves two separate variances: the labor rate variance and labor efficiency variance.

Detailed explanation-3: -What is a Controllable Variance? A controllable variance refers to the “rate” portion of a variance. A variance is comprised of two elements, which are the volume variance and the rate variance.

Detailed explanation-4: -For example, excess usage of materials, excess time taken by worker etc. is the relevant examples of controllable variance. Uncontrollable variances are those variances which arise due to factors beyond the control of the management or concerned person or department of the organisation.

Detailed explanation-5: -Direct labour cost variance is the difference between the standard cost for actual production and the actual cost in production. There are two kinds of labour variances. Labour Rate Variance is the difference between the standard cost and the actual cost paid for the actual number of hours.