It seems that once you've been operating for a while you should be able to recalculate your cost of Labor and Overhead by using the numbers on your financial statement. For instance, our Absorbed Labor Variance has been consistently off in once direction for quite a while. Shouldn't I be able to use the Absorbed Labor and Absorbed Labor Variance amounts and adjust my Labor cost by that percentage?
 
For instance, say my Labor Cost is stated as $10/hr, and on my P&L the Absorbed Labor is -$100 and Absorbed Labor Variance is -$10. That would suggest to me that my Labor Cost should be 10% higher, or $11.
 
Is it that simple or am I missing something?
 
Thanks,
-d

Or take the actual direct labor divided by the number of hours.  The absorbed Labor Variance is not a system generated value.  It is something you determine by comparing Absorbed to Actual labor.