Causes of Labor Variances

Causes of Labor Variances - would result if a skilled...

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Causes of Labor Variances Labor price variances  usually result from two factors: (1) paying workers  higher wages than  expected , and (2)  misallocation of workers . In companies where pay rates are determined by union  contracts, labor price variances should be infrequent. When workers are not unionized, there is a  much higher likelihood of such variances. The responsibility for these variances rests with the  manager who authorized the wage increase.  Misallocation of the workforce refers to using skilled workers in place of unskilled workers and vice  versa . The use of an inexperienced worker instead of an experienced one will result in a favorable  price variance because of the lower pay rate of the unskilled worker. An unfavorable price variance 
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Unformatted text preview: would result if a skilled worker were substituted for an inexperienced one. The production department generally is responsible for labor price variances resulting from misallocation of the workforce. Labor quantity variances relate to the efficiency of workers . The cause of a quantity variance generally can be traced to the production department. The causes of an unfavorable variance may be poor training, worker fatigue, faulty machinery, or carelessness. These causes are the responsibility of the production department . However, if the excess time is due to inferior materials, the responsibility falls outside the production department....
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Causes of Labor Variances - would result if a skilled...

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