If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual direct labor incurred is 600 hours at $17, the direct labor rate variance is $1,200 favorable.

Direct Labor Rate Variance

The difference between the actual rate and the standard rate paid for direct labor multiplied by the actual direct labor hours used in producing a product.

Direct Labor

The wages paid to workers who are directly involved in the production of goods or services.