Enter the actual hours worked, the actual rate paid, and the standard rate pay into the calculator to determine the labor rate variance.

## 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?

1. First, determine the actual hours work.

Measure the total hours worked by the worker or group.

2. Next, determine the rate paid.

Determine the actual rate paid for this work in \$/hr.

3. Next, determine the standard rate.

Determine what the standard or industry rate typically is for the labor being performed.

4. 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.

## FAQ

What is labor rate variance?

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.