Labor price variance, or direct labor rate variance, measures the difference between the budgeted hourly rate and the actual rate you pay direct labor workers who directly manufacture your products.

Labor variance occurs when the projected or budgeted amount of cost of labor is either lower or higher than estimated. Labor variances happen for a variety of reasons, explains AccountingTools.com.

Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School ...