Enter the actual hours worked, the actual rate paid, and the standard rate pay into the calculator to determine the labor rate variance.
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Labor Rate Variance Formula
The following formula is used to calculate the labor rate variance.
LRV = H * (AR - SR)
- Where LRV is the labor rate variance ($)
- H is the total hours worked (hrs)
- AR is the actual rate paid ($/hr)
- SR is the standard rate ($/hr)
Labor Rate Variance Definition
A labor rate variance is a measure between the total amount paid for labor and the standard amount paid.
Labor Rate Variance Example
How to calculate the labor rate variance?
- First, determine the actual hours work.
Measure the total hours worked by the worker or group.
- Next, determine the rate paid.
Determine the actual rate paid for this work in $/hr.
- Next, determine the standard rate.
Determine what the standard or industry rate typically is for the labor being performed.
- Finally, calculate the labor rate variance.
Using the 3 values from steps 1-3, calculate the labor rate variance using the formula or calculate above.
Labor rate variance is the total difference between the total paid amount for a certain amount of labor and the standard amount that the labor usually commands.