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
Answer:
mention the brilliant
Explanation:
1. Direct Labour Cost Variance: Rs. 4,000 (A)
2. Direct Labour Rate Variance: Rs. 8,000 (A)
3. Direct Labour Idle Time Variance: Rs. 1,600 (A)
4. Direct Labour Efficiency Variance: Rs. 5,600 (F)
Direct Labor Cost Variance: Rs. 4,000 (u) Direct Labor Rate Variance: Rs. 8,000 (uf) Direct Labor Idle Time Variance: Rs. 1,600 (uf) Direct Labor Efficiency Variance: Rs. 5,600 (f)
Explanation:
Time = 6 hours
Rate = Rs.4/hour
Actual cost of production = 1500 units
Hours taken = 7600 hours
Idle Time = 400 hours
Total hours = 8000 hours
(i) Direct Labor Cost Variance = ( ST × SR ) - (AT - AR)
=(9000*4) - (8000*5)
= Rs. 4000.
where SR= Standard Rate
AT = Total hours
AR = Actual rate
ST= Standard Time = 1500 units × 6 hours
= 9000 units.
(ii)Direct Labor Rate Variance = AT(SR- AR)
= 8000( 4-5)
= Rs.8000( favorable)
(iii) Direct Labor Idle Time Variance = IT × SR
=400 × 4
= Rs. 1600 ( unfavorable)
(iv)Direct Labor Efficiency Variance = SR(ST-AT)
=4(9000-7600)
= Rs.5600
To Learn More...
1. What is Labour Variance?
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2.What does the direct labor efficiency variance tell us?
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