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Labour Rate Variance Formula

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Labour Rate Variance occurs when labour is paid at a rate that differs from the standard wage rate. Check FAQs

LR = AT \cdot (SR - ART) \cdot V

LR - Labour Rate Variance?AT - Actual Time?SR - Standard Rate?ART - Actual Rate?V - Variance?

Labour Rate Variance Example

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With units

Only example

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

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

Here is how the Labour Rate Variance equation looks like.

3900 = 4 \cdot (140 - 75) \cdot 15

3900 = 4 \cdot (140 - 75) \cdot 15

3900 = 4 \cdot (140 - 75) \cdot 15

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Labour Rate Variance Solution

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

FIRST Step Consider the formula

LR = AT \cdot (SR - ART) \cdot V

Next Step Substitute values of Variables

∴

LR = 4 \cdot (140 - 75) \cdot 15

Next Step Prepare to Evaluate

∴

LR = 4 \cdot (140 - 75) \cdot 15

LAST Step Evaluate

∴

LR = 3900

Labour Rate Variance Formula Elements

Variables

Labour Rate Variance

Labour Rate Variance occurs when labour is paid at a rate that differs from the standard wage rate.

Symbol: LR

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Labour Rate Variance

Actual Time

Actual Time refers to the time taken to produce an item on a production line versus the planned production time.

Symbol: AT

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Actual Time

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 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

Variance

Variance refers to the difference or deviation between an actual outcome or result and an expected or planned outcome.

Symbol: V

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Variance

Other formulas in Cost Accounting category

Go Material Cost Variance

MCV = (SQAO \cdot STP) - (ACQ \cdot ACP)

Go Material Price Variance

MPRV = ACQ \cdot (STP - ACP)

Go Material Quantity

MQ = STP \cdot (SQ - ACQ)

Go Revised Standard Quantity

RSTQ = (\frac{SQM}{TSQ}) \cdot TAQ

How to Evaluate Labour Rate Variance?

Labour Rate Variance evaluator uses Labour Rate Variance = Actual Time*(Standard Rate-Actual Rate)*Variance to evaluate the Labour Rate Variance, Labour Rate Variance measures the difference between the actual labor rate and the standard labor rate. Labour Rate Variance is denoted by LR symbol.

How to evaluate Labour Rate Variance using this online evaluator? To use this online evaluator for Labour Rate Variance, enter Actual Time (AT), Standard Rate (SR), Actual Rate (ART) & Variance (V) and hit the calculate button.

FAQs on Labour Rate Variance

What is the formula to find Labour Rate Variance?

The formula of Labour Rate Variance is expressed as Labour Rate Variance = Actual Time*(Standard Rate-Actual Rate)*Variance. Here is an example- 3900 = 4*(140-75)*15.

How to calculate Labour Rate Variance?

With Actual Time (AT), Standard Rate (SR), Actual Rate (ART) & Variance (V) we can find Labour Rate Variance using the formula - Labour Rate Variance = Actual Time*(Standard Rate-Actual Rate)*Variance.

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Labour Rate Variance Formula

Labour Rate Variance Example

Labour Rate Variance Solution

Labour Rate Variance Formula Elements

Other formulas in Cost Accounting category

How to Evaluate Labour Rate Variance?

FAQs on Labour Rate Variance

Variable Name