Labour total variance
The labour total variance compares standard labour cost for actual output with actual labour cost. It normally combines rate and efficiency effects on a consistent hours basis, with idle time separately identified if required. The analysis explains a cost difference, but does not establish whether the workforce, purchasing, scheduling or management caused it. Reconcile all components and use the question’s treatment of premiums and paid versus productive time.
Worked example
Standard 100 hours at $20 gives $2,000. Actual 110 hours at $19 gives $2,090: total $90 adverse, comprising $110 favourable rate and $200 adverse efficiency.
Common mistake
Do not add an idle-time variance twice when it is already included in the hours used for an efficiency calculation.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| ACCA | PM | Supporting | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
