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what is labour rate and labour efficiency variance ??
why do we calculate it ?
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Labour rate variance is the difference between actual hour worked at standard rate and actual labour cost.
Labour efficiency variance is the difference between standard hour worked and actual hour worked value at standard rate per hour. Standard hour = standard hour per unit x actual unit.
Purpose of calculating it is of course for reporting and control purpose. You can identify which area is different from standard and take control if it is significant.Guys
Why don’t you watch lectures on variances, in f5 resources section here on the site
It would make your life easier
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By common sense, for example, if you are paying more than what you should be paying, then it is adverse variance.
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