Labour

Similar to material usage variance, labour efficiency variance measures the
efficiency of labour by identifying the difference between the actual hours worked and the
hours which should have been worked as per the established standards. Deviations in the
actual rate of pay and the ones estimated are measured by the labour rate variance.
Mathematically
Labour efficiency variance = Std. rate (Std. time – Actual time)
Labour rate variance = Actual time (Std. rate – Actual rate)