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Labour Cost Variance Formula

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Labour Cost Variance is the difference between the expected cost of labour and the actual cost of labour. Check FAQs

LCV = (SO \cdot SR) - (ATH \cdot ART)

LCV - Labour Cost Variance?SO - Standard Hours for Actual Output?SR - Standard Rate?ATH - Actual Hours?ART - Actual Rate?

Labour Cost Variance Example

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With units

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Here is how the Labour Cost Variance equation looks like with Values.

Here is how the Labour Cost Variance equation looks like with Units.

Here is how the Labour Cost Variance equation looks like.

465 = (6 \cdot 140) - (5 \cdot 75)

465 = (6 \cdot 140) - (5 \cdot 75)

465 = (6 \cdot 140) - (5 \cdot 75)

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Labour Cost Variance Solution

Follow our step by step solution on how to calculate Labour Cost Variance?

FIRST Step Consider the formula

LCV = (SO \cdot SR) - (ATH \cdot ART)

Next Step Substitute values of Variables

∴

LCV = (6 \cdot 140) - (5 \cdot 75)

Next Step Prepare to Evaluate

∴

LCV = (6 \cdot 140) - (5 \cdot 75)

LAST Step Evaluate

∴

LCV = 465

Labour Cost Variance Formula Elements

Variables

Labour Cost Variance

Labour Cost Variance is the difference between the expected cost of labour and the actual cost of labour.

Symbol: LCV

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Labour Cost Variance

Standard Hours for Actual Output

Standard Hours for Actual Output is a measure to assess the efficiency of labour utilization to the actual production achieved.

Symbol: SO

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Standard Hours for Actual Output

Standard Rate

Standard Rate refers to the amount paid per hour for work, often determined by industry standards or local laws.

Symbol: SR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Standard Rate

Actual Hours

Actual Hours refers to the total number of hours worked by labour in a specific period, such as a day, week, month, or accounting period.

Symbol: ATH

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Actual Hours

Actual Rate

Actual Rate refers to the real or current rate at which items are measured.

Symbol: ART

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Actual Rate

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How to Evaluate Labour Cost Variance?

Labour Cost Variance evaluator uses Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate) to evaluate the Labour Cost Variance, Labour Cost Variance measures the difference between the actual labour cost and the standard labour cost. Labour Cost Variance is denoted by LCV symbol.

How to evaluate Labour Cost Variance using this online evaluator? To use this online evaluator for Labour Cost Variance, enter Standard Hours for Actual Output (SO), Standard Rate (SR), Actual Hours (ATH) & Actual Rate (ART) and hit the calculate button.

FAQs on Labour Cost Variance

What is the formula to find Labour Cost Variance?

The formula of Labour Cost Variance is expressed as Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate). Here is an example- 465 = (6*140)-(5*75).

How to calculate Labour Cost Variance?

With Standard Hours for Actual Output (SO), Standard Rate (SR), Actual Hours (ATH) & Actual Rate (ART) we can find Labour Cost Variance using the formula - Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate).

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Labour Cost Variance Formula

Labour Cost Variance Example

Labour Cost Variance Solution

Labour Cost Variance Formula Elements

Other formulas in Cost Accounting category

How to Evaluate Labour Cost Variance?

FAQs on Labour Cost Variance

Variable Name