Labour yield variance

Labour yield variance measures the cost effect of actual total labour hours worked differing from the standard hours allowed for actual output, holding the standard labour mix and rate constant.

ByHoang TruongUpdated July 5, 2026

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Producing 1,000 units should take 5,000 standard hours in total. The workforce actually worked 5,200 hours, 200 more than standard. Valued at the €14 standard weighted-average rate, that overrun is €200 times €14, or €2,800 adverse — a pure total-hours effect, independent of labour grade mix.

Where it fits

SubjectManagerial AccountingAdvancedTopicStandard Costing & Variance AnalysisAdvanced

The formula

LaTeX

LYV = (H_{std} - H_{actual}) \times \bar{R}_{std}

Variables

$L Y V$: Labour yield variance (€)
$H_{s t d}$: Standard hours allowed for the actual output achieved (hours)
$H_{a c t u a l}$: Actual total hours worked, all grades combined (hours)
$\overset{ˉ}{R}_{s t d}$: Standard weighted-average rate per hour across all labour grades in the standard mix (€ per hour)

Compares the standard total hours allowed for the output produced against the actual total hours worked, valued at the blended standard rate.