The term gang represents the composition of more than one grade workers/employees. This composition may differ in between the standard and the actual. Hence, the labor mix or gang composition variance occurs due to the difference between standard labor grades specified and actual labor grades utilized.
Formula For The Calculation Of Labor Mix Variance(LMV)
LMV = SR x (RST - AT)
Where,
LMV = Labor mix variance
SR = Standard Rate
RST = Revised standard time
AT = Actual time
NOTE:
RST = (Total time of actual mix/Total time of standard mix) x Standard time of each grade of employees.
If the resulting figure is positive, it is denoted as favorable and if the resulting figure is negative, it is denoted as unfavorable variance.
Formula For The Calculation Of Labor Mix Variance(LMV)
LMV = SR x (RST - AT)
Where,
LMV = Labor mix variance
SR = Standard Rate
RST = Revised standard time
AT = Actual time
NOTE:
RST = (Total time of actual mix/Total time of standard mix) x Standard time of each grade of employees.
If the resulting figure is positive, it is denoted as favorable and if the resulting figure is negative, it is denoted as unfavorable variance.