Variance analysis of direct material and direct labor costs

Authors

  • Reshna Osman Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Sina Star Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Rayan Khalid Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Hevi Hardi Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Aland Farhad Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Lania Khalil Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Farzand Aram Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Zryan Burhan Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Muhammad Kamal Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Aland Shakhawan Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq
  • Bilal Rawf Department of Accounting, Sulaimani Polytechnic University, Sulaymaniyah, Iraq

DOI:

https://doi.org/10.31039/bjir.v3i12.133

Keywords:

Variance Analysis, Standard Costing, Direct Materials, Direct Labor, Cost Control, Manufacturing Efficiency

Abstract

This research explores the pivotal role of variance analysis in managing and controlling direct material and direct labor costs in manufacturing environments. With increasing global competition, the accuracy of standard costing systems is essential for business sustainability and value creation. The study aims to analyze how price and efficiency variances impact overall production budgets and management decisions. Employing a rigorous analytical methodology, the research explores the mathematical frameworks for price and quantity variances of materials, along with labor rate and efficiency variances. The findings indicate that systematic monitoring of variances not only identifies operational inefficiencies but also serves as a strategic tool for enhancing competitive advantage. By aligning theoretical standards with practical factory floor data, the study provides a roadmap for cost accountants to minimize waste and optimize resource allocation.

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Published

2026-06-01

How to Cite

Osman, R., Star, S., Khalid, R., Hardi, H., Farhad, A., Khalil, L., … Rawf, B. (2026). Variance analysis of direct material and direct labor costs. British Journal of Interdisciplinary Research, 3(12), 62–70. https://doi.org/10.31039/bjir.v3i12.133

Issue

Vol. 3 No. 12 (2026): June 2026

Section

Articles