The difference between the cost
of a specific number of budgeted labor
hours and the actual cost
that was incurred
. For example, if a company
budgeted $20,000 for 1,000 hours to be spent manufacturing during the course of a month
, but the actual cost of 1,000 hours of labor was $25,000, the direct labor rate variance is $5,000 ($25,000 - $20,000).