Direct Labor Variance Analysis

This video explains how to conduct variance analysis of direct labor. A comprehensive example is provided to demonstrate how the rate variance and quantity variance are calculated, and similarities between the computation of direct materials variances and direct labor variances are highlighted.
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[@matthewsattam1982]

Have watched about 8-10 videos from your Managerial Accounting series so far. You're a great teacher!

[@Edspira]

+Matthew Sattam Thank you! I'm glad you find the videos helpful. I hope your class is going well!

[@pollyg.6953]

@@Edspira I agree with Matthew. You are a great teacher! Thank you for the videos :)

[@stephanvanzyl7303]

My man, you are the reason that I will be able to become a chartered accountant. You have my eternal gratitude.

[@Edspira]

Thank you for such kind words. I'm humbled to be part of your educational journey, and I hope you have a successful and fulfilling career as an accountant!

[@zachaber607]

This guy has helped me pass so many accounting classes. Listen to him

[@demonfromwithin]

You honestly explain variance analysis better than the CPA learning e-book. Thanks for these videos they're 10/10

[@jasondeng487]

GOAT teacher forever.

[@Edspira]

Thank you my friend!

[@rob8482]

Top shelf, as good as it gets. You need an award for being the best teacher on KZbin. You need to be cloned and placed in every class room that exists. Wow it's that good for real!

[@Edspira]

Thank you for the kind words! It is for good people such as yourself that I do this!!

[@sarahwatts8768]

I have been struggling with this concept for the last few days. I watched your video and within an hour my homework was complete and I completely understood what to do. Thank you so much for this video! You explained it so well and in a way that was so easy to grasp. I really appreciate it!

[@MedhanieKiflay]

Teacher by nature! Thank you so much!

[@chivasuarez]

We need more people teaching variances this way. Thank you very much! These videos really cleared things up for me. Gleim and my instructor just confused me.

[@Edspira]

+Tavo Suarez My pleasure-- thank you!

[@llw7079]

That's the third video I am watching regarding to variance analysis, you are really doing a great job!! Very Clear! Thanks!

[@Edspira]

Thanks!

[@shakimbreen4870]

All of his videos are so helpful.

[@music556]

This video cleared up a 2-hour lecture on the same topic. Thank you! Much appreciated.

[@Edspira]

No problem. Thanks for watching!

[@tylermccarthy1932]

Just when I was starting to think Accounting 2 was rocket science... Thank you for decoding these simple steps!

[@Edspira]

No problem. Good luck in your accounting course!

[@darynandrews6545]

You really make standard costing so simple, thank you

[@KiRAxXxX]

You are a godsend.. literally saved my ass. Thanks so much man

[@Edspira]

+KiRAxXxX No problem. I hope you did great in your course. Have a nice winter break!

[@Jsween876]

instead of saying quantity variance, say efficiency variance (since we are talking about labour). Also, a better explanation for why the total variance is unfavourable is because even though your efficiency variance was favourable (meaning you used less hours than expected) your rate variance was unfavourable (meaning you still ended up paying more per labour hour than expected/budgeted). Once you end up spending more than expected, the outcome is unfavourable.

[@reneefongg]

thx,this is emphasized by my lecturer as well

[@eishcream]

do you have overhead variance video? thank you

[@danielj5650]

thanks Ed, your videos have saved me

[@hectorvelez4067]

You make these topics and concepts so understandable! Thank you!

[@DaisyGeekyTransGirl]

Well, I have found the CGP Grey of accounting. Awesome teachers on KZbin who I wish were my teachers lol.

[@Edspira]

lol

[@Fearless3773]

You are awesome at clearing up the basics. The problem is my instructors like to throw endless curve balls to over complicate things like only giving a variance, and making me work backwards and my mind shuts down lol.

[@CalebsCastles]

Great instructor! Thank you for taking the time to make and post this video.

[@ELBStr8Cash]

Thanks for your thoroughness!!

[@bloodfire893]

you are amazing thank you

[@Edspira]

Thank you!

[@Nenzo_]

you are absolutely amazing indeed!

[@tiooo18]

Overhead variance pleaseee :( Iam using two books for this variance chapter, horngren and charter, they just give me headache

[@anthonyabira]

Great video. The quantity variance in this case is otherwise known as the "Rate Efficiency Variance"

[@reneefongg]

thx)

[@PeerShaheen]

Thanks for this! Appreciate the work👌

[@Edspira]

No problem my friend!

[@amirbeglouei367]

Thank you so much for your explanation. it helped me out a lot.

[@sandeshbal]

Awesome Awesome..amazing teaching

[@Edspira]

Thanks Sandesh!

[@prashantbishwas7106]

This man , I want to see his face , wish my teacher cann make me understand like him

[@charmainetabar6927]

Thank you so much for making me understand variances 😊

[@sonikurup1668]

thankyou

[@rishinittala2472]

Love the videos! But in this particular instance, the problem that I see is that in reality, many companies may not assume a steady flow of business. So if the labour finishes work earlier, then they would end up idling thereby costing the manager money. Labourers don't work for every hour they work, they get paid every month provided that they clock their required hours in. So even if I saved time in their manufacturing process, I still pay them their full monthly salary. So it's right to not fall in love with what is 'favourable,' one's gotta see if they are converting more business leads into sales so the idle time, which was made available due to the time-saving as aforementioned, can be used for serving the next sale. But if there is no new sale, then the favourable hours that were saved quickly become toxic.

[@chiomao5218]

I wanted to ask, would the quantity variance be the same as the cost variance and the total variance the same as the efficiency variance

[@ColinZGMF]

Thanks so much for your videos!

[@tans1910]

Dear publisher, Thank you very much for the videos. However, I noticed that the order of these videos are not correct in the playlist and it doesnt add up when you watch them one by one in the playlist. (Especially during the variance section). Could you please re-arrange the same. Thanks!

[@Hooyahfish]

You should seriously consider teaming up with KhanAcademy.org . You use the same program to write on your screen as they do and they do not have ANY managerial accounting videos. Im sure you could just send them these videos as-is. Ive been using them to learn statistics but thankfully I found you to learn accounting!

[@arianamm8932]

Thank you!

[@beautifulwhitecat]

I like the neon colors on the black background. What program or app do you use to write like this?

[@Edspira]

Thanks! I use a Wacom Bamboo Tablet to write, and Camtasia Studio to do the screen recording.

[@chenarjamil9272]

First, thank you for your great videos, but don't you think the second part which is quantity variance (should have been efficiency variance)? as because it is labor

[@Edspira]

Yes, you are correct that it is frequently called the efficiency variance when it pertains to labor

[@Younessss_]

Shouldn't it be efficiency variance instead of quantity variance?

[@Edspira]

You are correct, when it comes to labor people commonly refer to the quantity variance as the efficiency variance

[@beansbrideau931]

Now how do you take this info and calculate direct labor mix and yield variances?

[@Topnews101]

Where its written quantity variance second part isn't efficiency variance??

[@jacquelinechan3576]

Hi! I just have a question about the quantity variance, can this also be called the efficiency variance?

[@Edspira]

Yes, that is correct

[@alextung2902]

Great Video Howerver, I got a problem for direct material and direct labor variance. Let use direct material as an example three calculation is - Actual Quantity x Actual Price - Actual Quatity x Standard Price - Standard Quantity x Standard Price For second formula, can we use Standard Quantity x Actual Price? I just don't got the idea of second formula Please help Thanks

[@Edspira]

+Alex Tung Great question! People typically use Standard Quantity x Standard Price. What they are trying to determine is whether there was a variance in how much material was used in production. For example, if your firm uses clay to produce brick, and you discover that the firm is using way too much clay (the actual amount used is greater than the standard), it could serve as a red flag that there is a problem in the manufacturing process that is leading to waste.

[@christopherbowen4850]

not sure why I can only see a green screen....