Causes For Labour Cost Variance


Direct labour rate variance occur due to the following:

  1. Change in basic wage structure or change in piece work rate. This will give rise to the variance till such time the standards are not revised.
  2. Employment of workers of grades and rates of pay different from those specified due to shortage of labour of the proper category, or through mistake, or due to the retention of surplus labour.
  3. Payment of guaranteed wages to workers who are unable to earn their normal wages if such guaranteed wages form part of direct labour cost.
  4. Use of a different method of payment e.g. payment of day – rates while standards are based on piece work method of remuneration.
  5. Higher to lower rates paid to casual and temporary workers employed to meet seasonal demands or urgent or special work.
  6. New workers not being allowed full normal wage rates.
  7. Over time and night shift work in excess of or less than the standard, or where no provision has been made in their standard. This will be applicable only if overtime and shift differential payments form that laid down in the standard.
The following two tabs change content below.
We, at, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]
  1. Alice 6 years ago

    That is a giod tiip particularly to those fresh to the blogosphere.
    Brief but veryy precise info… Thanks for sharing this
    one. A must read article!

Leave a reply is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp

Log in with your credentials


Forgot your details?


Create Account