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Chapter 10

Labour variances

Total labour variance

Labour rate variance Materials usage variance

 Did labour cost more or  Did production take more
less per hour than or less hours than
expected? expected?

Actual hours × actual rate (AH AR)

Rate variance
Actual hours × standard rate (AH SR)

Actual hours × standard rate (AH SR)
Efficiency variance
Standard hours × standard rate (SH SR)

Illustrations and further practice

Now try TYU 3 ‘Labour variances’.

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