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Describe the relationship between "Efficiency Variance" and "Price Variance".

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Question ajoutée par Utilisateur supprimé
Date de publication: 2014/08/19
Mohammed Abdul Raheem
par Mohammed Abdul Raheem , SAP Fico Functional Consultant , Yash Technologies

Labor price variance, or rate variance, measures the difference between the budgeted hourly rate and the actual rate you pay direct labor workers who directly manufacture your products. Labor efficiency variance measures the difference between the number of direct labor hours you budgeted and the actual hours your employees work. Compare these two variances to determine how well your small business managed its direct labor costs during a period.

Mohamed Munaj M
par Mohamed Munaj M , Senior Executive - Controlling , Luk India Pvt Limited

Efficiency Variance is the difference between Standard Labour Cost for Standard hours and Standard Labour cost for Actual hours.

Efficiency Variance = (Standard hours x Standard rate) - (Actual hours x Standard rate)

 

Price Variance is the difference between Standard Material cost for Actual quantity and Actual Material cost Actual quantity.

Price variance = (Actual Quantity x Standard rate) - (Actual Quantity x Actual rate)

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