Work out labour variance instantly with clear inputs, formula shown and shareable results.
Labour variance splits into a rate variance, owned by whoever sets pay and staffing mix, and an efficiency variance, owned by production. The rate difference is applied to actual hours and the hours difference to the standard rate, keeping the two effects separate.
Rate variance
LRV = (Standard rate - Actual rate) x Actual hours
Efficiency variance
LEV = (Standard hours - Actual hours) x Standard rate
Overtime premia, agency cover, or using higher-graded staff than the standard assumed.
Yes — training new starters, running a first article, or working with substandard material all consume hours the standard does not allow.