The total direct labor variance is the sum of the direct labor rate variance and the direct labor efficiency variance.

Question

Quizplus · Accepted Answer

The formula for the total direct labor variance is: 
Total DLV = (Actual hours worked x Actual labor rate) - (Standard hours allowed x Standard labor rate).

This can be further broken down into: 
Total DLV = (Actual hours worked x Actual labor rate) - (Actual hours worked x Standard labor rate) + (Actual hours worked x Standard labor rate) - (Standard hours allowed x Standard labor rate).

The first part (Actual hours worked x Actual labor rate) is the direct labor cost, which is the product of direct labor rate and direct labor efficiency. Therefore, the total direct labor variance is the sum of the direct labor rate variance and the direct labor efficiency variance.

The Total Direct Labor Variance Is the Sum of the Direct