direct labor cost variance formula
Difference between the amount of labor time that should have been used and the labor that was actually used, multiplied by the standard rate. For example, assume that the standard cost of direct labor per unit of product A is 2.5 hours x $14 = $35.Assume further that during the month of March the company recorded 4500 hours of direct labor time. The actual cost of this labor time was $64,800, or an average of $14.40 per hour.or example, assume that the standard cost of direct labor per unit of product A is 2.5 hours x $14 = $35. Assume further that during the month of March the company recorded 4500 hours of direct labor time.