Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 21

Explain some of the possible causes of direct labor rate (price) and direct labor efficiency (quantity) variances. Who normally has responsibility for or influence over these variances?

Step 1 of 2

Direct cost & Sales variance & Control Systems

Sales variance is the breakdown of sales volume and which includes components like manufacturing cost (which is a direct cost), labour cost, material costs. Certain procedures are set in place, which help the organisation to control performance, which will include components from planning to evaluation. Similarly, operational & financial controls are also applied for cost control in their respective areas.