 Hello in this lecture we're going to talk about variance analysis with regards to direct labor talking about the rate variance and the efficiency variance. At the end of this we will be able to explain the use of variance analysis for direct labor, calculate rate variance and efficiency variance for direct labor. So when we think about these variance analysis we have to figure that we are going to be talking about a flexible budget meaning that if we had planned the budget to be at 70% capacity production of 42,000 and 210,000 for example we would need to change that if we had run the process and see that we actually produce at 90% capacity for example and 54,000 units and the actual labor being 265,000 hours. So if that was the case and that's going to be the case all the time we're going to have some different level of production than we had projected. So we will have the fixed budget when we plan out but when some