Next, compute the variances for direct labor. First, determine the formula for the rate variance, then compute the rate variance for direct labor. Determine the formula for direct labor the efficiency variance, then compute the efficiency variance for direct labor. Requirement 2. Does the pattern of variances suggest that the company's managers have been making trade-offs? Explain. The direct materials price variance combined with the direct materials quantity variance suggests that managers may have used materials. The net effect is The direct labor rate variance combined with the direct labor efficiency variance suggests that managers may have used workers who performed more efficiently. The net effect is