Question

Standard cost of product is: time 6 hours per unit, rate:rs 4 per hour, actual cost production:1500 units, hours taken:7600 units, idle time (in hours) 400 , total hours 8000,total labour cost announced to rs 40000 calculate labour variance​

Answer 1

Thus the rate of pay variance is 160000 Rs

Explanation:

Labour variance is defined as

It is that portion of the labour cost variance which arises due to the difference between the standard rate specified and the actual rate paid.

Formula:

Rate of Pay Variance = Actual Time Taken (Standard Rate – Actual Rate).

Rate of Pay Variance = 8000 (4 - 24)

Rate of Pay Variance = 8000 x 20 = 160000 Rs

Thus the rate of pay variance is 160000 Rs