Oct 302020

The actual rate (or actual weighted average rate) paid to labour for the period minus the standard rate multiplied by all hours actually worked during the period; it is actual labour cost minus (actual hours _ standard rate)

Come back to BankingGlossary.co.uk every time you need to define Finance and Banking terms. Learn definitions and glossary terms such as Labour Rate Variance every day and you will fly!


Do you have an example of where Labour Rate Variance can be used in context. Help me develop the site by leaving an example below. Every example using ‘Labour Rate Variance’ gets you another entry into the draw for 100 GBP of Amazon vouchers.

A winner will be selected on [date].

  One Response to “Labour Rate Variance Definition”

  1. The manager of a company estimates the average labour rate for the following year for its production staff will be £20 per hour. This estimate is based on a standard mix of employees on different pay rates, as well as a reasonable amount of overtime hours worked. During the first month of the new year, the company has difficulty hiring a sufficient number of new employees, and so must have its higher paid existing staff work overtime to complete a number of jobs. The result is an actual labour rate of £25 per hour. The company’s production staff worked 5000 hours during the month. Therefore;

    £25 per hour (Actual rate) – £20 per hour (Standard rate) x 5000 hours = £25,000 labour rate variance for the month

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>