Direct Labor Variance Analysis

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This video explains how to conduct variance analysis of direct labor. A comprehensive example is provided to demonstrate how the rate variance and quantity variance are calculated, and similarities between the computation of direct materials variances and direct labor variances are highlighted.
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Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
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Опубликовано:

24 сен 2024

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Комментарии : 69

@matthewsattam1982 8 лет назад

Have watched about 8-10 videos from your Managerial Accounting series so far. You're a great teacher!

@Edspira 8 лет назад

+Matthew Sattam Thank you! I'm glad you find the videos helpful. I hope your class is going well!

@pollyg.6953 3 года назад

@@Edspira I agree with Matthew. You are a great teacher! Thank you for the videos :)

@demonfromwithin 4 года назад

You honestly explain variance analysis better than the CPA learning e-book. Thanks for these videos they're 10/10

@zachaber607 7 лет назад

This guy has helped me pass so many accounting classes. Listen to him

@stephanvanzyl7303 3 года назад

My man, you are the reason that I will be able to become a chartered accountant. You have my eternal gratitude.

@Edspira 3 года назад

Thank you for such kind words. I'm humbled to be part of your educational journey, and I hope you have a successful and fulfilling career as an accountant!

@rob8482 7 лет назад

Top shelf, as good as it gets. You need an award for being the best teacher on RU-vid. You need to be cloned and placed in every class room that exists. Wow it's that good for real!

@Edspira 7 лет назад

Thank you for the kind words! It is for good people such as yourself that I do this!!

@chivasuarez 8 лет назад

We need more people teaching variances this way. Thank you very much! These videos really cleared things up for me. Gleim and my instructor just confused me.

@Edspira 8 лет назад

+Tavo Suarez My pleasure-- thank you!

@llw7079 7 лет назад

That's the third video I am watching regarding to variance analysis, you are really doing a great job!! Very Clear! Thanks!

@Edspira 7 лет назад

Thanks!

@MedhanieKiflay 5 месяцев назад

Teacher by nature! Thank you so much!

@sarahwatts8768 7 лет назад

I have been struggling with this concept for the last few days. I watched your video and within an hour my homework was complete and I completely understood what to do. Thank you so much for this video! You explained it so well and in a way that was so easy to grasp. I really appreciate it!

@shakimbreen4870 2 года назад

All of his videos are so helpful.

@music556 6 лет назад

This video cleared up a 2-hour lecture on the same topic. Thank you! Much appreciated.

@Edspira 6 лет назад

No problem. Thanks for watching!

@KiRAxXxX 8 лет назад

You are a godsend.. literally saved my ass. Thanks so much man

@Edspira 8 лет назад

+KiRAxXxX No problem. I hope you did great in your course. Have a nice winter break!

@tylermccarthy1932 6 лет назад

Just when I was starting to think Accounting 2 was rocket science... Thank you for decoding these simple steps!

@Edspira 6 лет назад

No problem. Good luck in your accounting course!

@jasondeng487 2 года назад

GOAT teacher forever.

@Edspira 2 года назад

Thank you my friend!

@darynandrews6545 3 года назад

You really make standard costing so simple, thank you

@hectorvelez4067 7 лет назад

You make these topics and concepts so understandable! Thank you!

@Mazikhal-f5g 20 дней назад

Our lecturer referred us to this vidoe ❤

@eishcream 7 лет назад

do you have overhead variance video? thank you

@danielj5650 5 лет назад

thanks Ed, your videos have saved me

@CalebsCastles 5 лет назад

Great instructor! Thank you for taking the time to make and post this video.

@ELBStr8Cash 4 года назад

Thanks for your thoroughness!!

@Fearless3773 4 года назад

You are awesome at clearing up the basics. The problem is my instructors like to throw endless curve balls to over complicate things like only giving a variance, and making me work backwards and my mind shuts down lol.

@Jsween876 4 года назад

instead of saying quantity variance, say efficiency variance (since we are talking about labour). Also, a better explanation for why the total variance is unfavourable is because even though your efficiency variance was favourable (meaning you used less hours than expected) your rate variance was unfavourable (meaning you still ended up paying more per labour hour than expected/budgeted). Once you end up spending more than expected, the outcome is unfavourable.

@reneefongg 4 года назад

thx,this is emphasized by my lecturer as well

@amirbeglouei367 5 лет назад

Thank you so much for your explanation. it helped me out a lot.

@charmainetabar6927 6 лет назад

Thank you so much for making me understand variances 😊

@bloodfire893 8 лет назад

you are amazing thank you

@Edspira 8 лет назад

Thank you!

@Nenzo_ 7 лет назад

you are absolutely amazing indeed!

@tiooo18 6 лет назад

Overhead variance pleaseee :( Iam using two books for this variance chapter, horngren and charter, they just give me headache

@anthonyabira 6 лет назад

Great video. The quantity variance in this case is otherwise known as the "Rate Efficiency Variance"

@reneefongg 4 года назад

thx)

@tans1910 8 лет назад

Dear publisher, Thank you very much for the videos. However, I noticed that the order of these videos are not correct in the playlist and it doesnt add up when you watch them one by one in the playlist. (Especially during the variance section). Could you please re-arrange the same. Thanks!

@sandeshbal 5 лет назад

Awesome Awesome..amazing teaching

@Edspira 5 лет назад

Thanks Sandesh!

@PeerShaheen 4 года назад

Thanks for this! Appreciate the work👌

@Edspira 4 года назад

No problem my friend!

@ColinZGMF 8 лет назад

Thanks so much for your videos!

@chiomao5218 8 лет назад

I wanted to ask, would the quantity variance be the same as the cost variance and the total variance the same as the efficiency variance

@rishinittala2472 2 года назад

Love the videos! But in this particular instance, the problem that I see is that in reality, many companies may not assume a steady flow of business. So if the labour finishes work earlier, then they would end up idling thereby costing the manager money. Labourers don't work for every hour they work, they get paid every month provided that they clock their required hours in. So even if I saved time in their manufacturing process, I still pay them their full monthly salary. So it's right to not fall in love with what is 'favourable,' one's gotta see if they are converting more business leads into sales so the idle time, which was made available due to the time-saving as aforementioned, can be used for serving the next sale. But if there is no new sale, then the favourable hours that were saved quickly become toxic.

@sonikurup1668 3 года назад

thankyou

@arianamm8932 7 лет назад

Thank you!

@beautifulwhitecat 6 лет назад

I like the neon colors on the black background. What program or app do you use to write like this?

@Edspira 6 лет назад

Thanks! I use a Wacom Bamboo Tablet to write, and Camtasia Studio to do the screen recording.

@prashantbishwas7106 3 года назад

This man , I want to see his face , wish my teacher cann make me understand like him

@Hooyahfish 6 лет назад

You should seriously consider teaming up with KhanAcademy.org . You use the same program to write on your screen as they do and they do not have ANY managerial accounting videos. Im sure you could just send them these videos as-is. Ive been using them to learn statistics but thankfully I found you to learn accounting!

@chenarjamil9272 4 года назад

First, thank you for your great videos, but don't you think the second part which is quantity variance (should have been efficiency variance)? as because it is labor

@Edspira 4 года назад

Yes, you are correct that it is frequently called the efficiency variance when it pertains to labor

@beansbrideau931 6 лет назад

Now how do you take this info and calculate direct labor mix and yield variances?

@Topnews101 3 года назад

Where its written quantity variance second part isn't efficiency variance??

@Younessss_ 4 года назад

Shouldn't it be efficiency variance instead of quantity variance?

@Edspira 4 года назад

You are correct, when it comes to labor people commonly refer to the quantity variance as the efficiency variance

@alextung2902 8 лет назад

Great Video Howerver, I got a problem for direct material and direct labor variance. Let use direct material as an example three calculation is - Actual Quantity x Actual Price - Actual Quatity x Standard Price - Standard Quantity x Standard Price For second formula, can we use Standard Quantity x Actual Price? I just don't got the idea of second formula Please help Thanks

@Edspira 8 лет назад

+Alex Tung Great question! People typically use Standard Quantity x Standard Price. What they are trying to determine is whether there was a variance in how much material was used in production. For example, if your firm uses clay to produce brick, and you discover that the firm is using way too much clay (the actual amount used is greater than the standard), it could serve as a red flag that there is a problem in the manufacturing process that is leading to waste.