Check My Work For the direct laborate variances, determine whether each item will impact the total price paid for the labor For direct labor time variances, determine whether each item will impact the quantity of hours used. Gauging the favorableness of Variances When variances occur, they are described as being elther favorable or unfavorable. When actual activity consumes more time or money than initially planned, an unfavorable variance exists. However, when actual activity consumes less time or money than initially planned, a favorable variance exists. Note that the terms favorable and unfavorable are used, rather than saying that a variance is good or bad, because until the cause of a variance is discovered, it is not clear whether a variance is either good or bad Note: Use the minus sign to indicate negative values (when the budgeted amount is greater than the actual). If a company calculates that the actual cost for the actual hours worked by employees was $5,000,000, and the amount budgeted for those hours actually worked was $4,600,000, the actual cost for hours worked less the budgeted cost for hours worked is . This tells you that the actual costat actual hours worked is greater than the budgeted cost at actual hours worked. What type of variance is this? Unfavorable direct labor rate variance If a company calculates that the budgeted cost for actual hours worked is $120,000, and the budgeted cost at the budgeted amount of hours to have been worked is $120,000, the budgeted cost at actual time worked less the budgeted cost at budgeted hours to have been worked is This tells you that the actual hours worked at budgeted cost is equal to budgeted hours worked at budgeted cost. What type of variance is this? No Variance Checy