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.

Direct labor rates are the labor costs directly resulting in the production of a product or delivery of a service. These costs include wages as well as payroll taxes, insurance, retirement matches, ...