A direct labor cost variance may be broken down into a controllable variance and a volume variance.

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A direct labor cost variance is typically broken down into a rate variance, which measures the difference between the actual hourly wage paid and the standard wage, and an efficiency variance, which measures the difference between the actual hours worked and the standard hours expected for the actual production level. A volume variance relates to fixed overhead costs, not direct labor.

A Direct Labor Cost Variance May Be Broken Down into a Controllable