1. What is Labour Efficiency Variance?

Labour Efficiency Variance is the difference between the actual time worked and the total hours that should have been worked. It measures the efficiency of labor utilization in production processes.

2. How Does the Calculator Work?

The calculator uses the Labour Efficiency Variance formula:

Where:

• \( SR \) — Standard Rate per hour
• \( ST \) — Standard Time (expected hours)
• \( AT \) — Actual Time (hours worked)
• \( V \) — Variance units

Explanation: The formula calculates the financial impact of the difference between expected and actual labor time, multiplied by the standard rate and variance units.

3. Importance of Labour Efficiency Variance

Details: Labour Efficiency Variance is crucial for identifying inefficiencies in production processes, controlling labor costs, and improving operational performance in manufacturing and service industries.

4. Using the Calculator

Tips: Enter standard rate per hour, standard time in hours, actual time in hours, and variance units. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What does a positive variance indicate?
A: A positive variance indicates favorable efficiency where actual time was less than standard time.

Q2: What does a negative variance indicate?
A: A negative variance indicates unfavorable efficiency where actual time exceeded standard time.

Q3: How is standard time determined?
A: Standard time is typically established through time studies, historical data analysis, or industry benchmarks.

Q4: What factors can affect labor efficiency?
A: Factors include worker skill level, equipment condition, production methods, material quality, and work environment.

Q5: How often should labor efficiency be measured?
A: Regular monitoring (daily, weekly, or per production batch) helps identify trends and address issues promptly.