Business Studies, asked by uditjan1084, 11 months ago

Standard cost of product is : (20)
Time : 6 hours per unit Rate : Rs 4 per hour Actual cost : Production 1,500 units Hours taken 7,600 units Idle time (in hours) 400 Total hours : 8,000 Total labour cost announced to Rs. 40,000. Calculate Labour Variance.

Answers

Answered by Fatimakincsem
0

The direct labour variance is 5600 Rs

Explanation:

We are given that:

  • Rate = Rs.4/hour
  • Actual cost of production = 1500 units
  • Time = 6 hours
  • Hours taken = 7600 hours
  • Idle Time = 400 hours
  • Total hours = 8000 hours

Direct Labor Cost Variance = ( ST × SR ) - (AT - AR)

                                                 = (9000 x 4) - (8000 x 5)

                                                 =  4000  Rs.

ST= Standard Time = 1500 units × 6 hours

                                            = 9000 units.

(ii) Direct Labor Rate Variance = AT(SR - AR)

                                                  = 8000 ( 4 - 5)    

                                                 = 8000 Rs.

(iii) Direct Labor Idle Time Variance = IT × SR

                                                          =400 × 4

                                                          = 1600 Rs.  ( This is unfavorable)

(iv) Direct Labor Efficiency Variance = SR(ST- AT)

                                                          =4 (9000 - 7600)

                                                          = 5600  Rs.

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