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Labour Cost Variance Calculator

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Important Formulas of Cost Accounting

✖Standard Hours for Actual Output is a measure to assess the efficiency of labour utilization to the actual production achieved.ⓘ Standard Hours for Actual Output [SO]			+10% -10%
✖Standard Rate refers to the amount paid per hour for work, often determined by industry standards or local laws.ⓘ Standard Rate [SR]			+10% -10%
✖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.ⓘ Actual Hours [ATH]			+10% -10%
✖Actual Rate refers to the real or current rate at which items are measured.ⓘ Actual Rate [ART]			+10% -10%

✖Labour Cost Variance is the difference between the expected cost of labour and the actual cost of labour.ⓘ Labour Cost Variance [LCV]

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Labour Cost Variance Solution

STEP 0: Pre-Calculation Summary

Formula Used

Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate)
LCV = (SO*SR)-(ATH*ART)
This formula uses 5 Variables

Variables Used

Labour Cost Variance - Labour Cost Variance is the difference between the expected cost of labour and the actual cost of labour.
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.
Standard Rate - Standard Rate refers to the amount paid per hour for work, often determined by industry standards or local laws.
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.
Actual Rate - Actual Rate refers to the real or current rate at which items are measured.

STEP 1: Convert Input(s) to Base Unit

Standard Hours for Actual Output: 6 --> No Conversion Required
Standard Rate: 140 --> No Conversion Required
Actual Hours: 5 --> No Conversion Required
Actual Rate: 75 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

LCV = (SO*SR)-(ATH*ART) --> (6*140)-(5*75)

Evaluating ... ...

LCV = 465

STEP 3: Convert Result to Output's Unit

465 --> No Conversion Required

FINAL ANSWER

465 <-- Labour Cost Variance

(Calculation completed in 00.004 seconds)

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LaTeX Go Material Cost Variance = (Standard Quality for Actual Output*Standard Price)-(Actual Quantity*Actual Price)

Revised Standard Quantity

LaTeX Go Revised Standard Quantity = (Standard Quantity of each Material/Total Standard Quantity)*Total Actual Quantity

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Labour Cost Variance Formula

LaTeX Go

Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate)
LCV = (SO*SR)-(ATH*ART)

What is Labour Cost Variance ?

Labour Cost Variance is a concept used in managerial accounting and cost accounting to evaluate the difference between the actual cost of labour incurred and the standard or budgeted cost of labour for a specific period. It helps assess how efficiently labour cost is managed within an organization. It indicates whether labour costs were higher or lower than expected due to changes in wage rates, overtime usage, labour efficiency, or other factors. Labour cost variance analysis helps management understand the factors contributing to deviations in labour costs and take appropriate actions to control expenses. A positive variance may result from factors such as lower-than-expected wage rates, reduced overtime, or efficient labour utilization. A negative variance, on the other hand, may indicate higher-than-expected wage rates, increased overtime, or inefficiencies in labour management. Identifying the root causes of labour cost variances enables management to implement strategies to optimize labour costs.

How to Calculate Labour Cost Variance?

Labour Cost Variance calculator uses Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate) to calculate 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 calculate Labour Cost Variance using this online calculator? To use this online calculator 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. Here is how the Labour Cost Variance calculation can be explained with given input values -> 465 = (6*140)-(5*75).

FAQ

What is Labour Cost Variance?

Labour Cost Variance measures the difference between the actual labour cost and the standard labour cost and is represented as LCV = (SO*SR)-(ATH*ART) or Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate). Standard Hours for Actual Output is a measure to assess the efficiency of labour utilization to the actual production achieved, Standard Rate refers to the amount paid per hour for work, often determined by industry standards or local laws, 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 & Actual Rate refers to the real or current rate at which items are measured.

How to calculate Labour Cost Variance?

Labour Cost Variance measures the difference between the actual labour cost and the standard labour cost is calculated using Labour Cost Variance = (Standard Hours for Actual Output*Standard Rate)-(Actual Hours*Actual Rate). To calculate Labour Cost Variance, you need Standard Hours for Actual Output (SO), Standard Rate (SR), Actual Hours (ATH) & Actual Rate (ART). With our tool, you need to enter the respective value for Standard Hours for Actual Output, Standard Rate, Actual Hours & Actual Rate and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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