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Reporting Labor Variances >
Calculations
Calculations
The following calculations are used to determine variances. Please note that all calculations use the accounting standard costs. These are the costs that have been frozen for use by Inventory Accounting. Refer to the Accounting Standard Costs key concept for more information about how these standards are established.
Closure Variances
|
Labor Variance
|
=
|
Total labor value accrued in WIP
|
-
|
Value that has been removed from WIP via finished product or scrap
|
-
|
As-incurred labor variance
|
-
|
Manning variances
|
|
Overhead Cost
|
=
|
Total overhead value accrued in WIP
|
-
|
Value that has been removed from WIP via finished product or scrap
|
-
|
As-incurred overhead variance
|
Manning variance is calculated only for orders that do not book variances as incurred.
As-incurred Variances
Hours Earned:
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Labor Hrs Earned
|
=
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Quantity Complete
|
*
|
Standard Labor Hrs per Piece
|
|
Machine Hrs Earned
|
=
|
Quantity Complete
|
*
|
Standard Machine Hrs per Piece
|
Hours Varianced:
|
Labor Hrs Varianced
|
=
|
Labor Hrs Recorded
|
-
|
Labor Hrs Scrapped
|
-
|
Labor Hrs Earned
|
|
Machine Hrs Varianced
|
=
|
Machine Hrs Recorded
|
-
|
Machine Hrs Scrapped
|
-
|
Machine Hrs Earned
|
Labor Efficiency - Labor-paced workcenters:
|
Labor Efficiency
|
=
|
Labor Hours Varianced
|
*
|
Labor Rate at Workcenter
|
|
|
Labor Efficiency - Machine-paced workcenters:
|
Labor Efficiency
|
=
|
Machine Hours Varianced
|
*
|
Crew Ratio
|
*
|
Labor Rate at Workcenter
|
Overhead Efficiency:
Manning Efficiency:
When possible, as-incurred variances (labor, manning and burden) will be calculated for master operations. The variances will be booked when the order is closed. The variances will not be calculated for master operations under the following circumstances:
The detail operations are fixed time operations( the piece rate on the master is zero)
The detail operations are all crew operations, but with different crew sizes ( the crew flag on the master is Y, but the number of persons is zero).
The detail operations are machine-paced, but have different machine sizes (the machine/labor paced flag is M, but the number of machines is zero).