Question

Standard cost of product is :
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

Answer 1

Labour Variance

Given,

Standard cost of product is :

Time : 6 hours/unit

Rate : Rs 4/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.

Explanation:

A labour variance arises when the "actual cost" associated with a labour activity differs from the "expected amt". The "expected amount" is generally a budgeted or standard amount. The labor variance concept is most used in the production area, wherein it is called a "direct labor variance".

The labour variance is used in every part the business, so long there is some "compensation expense" to be compared to a std amount. It can also comprise various different  expenses, starting with the base compensation paid, & possibly  comprising  bonuses, payroll taxes, bonuses,  stock grants costs and also the benefits paid 

Solution

Standard Labour Cost = Standard hour x Standard Rate x Production

= 4 x 6 x 1500

= 36000

Direct labour Variance = Standard Labour Cost - Actual Labour Cost

=  36000 - 40000

= -4000

Labour Rate Variance = (standard rate - actual rate**) x actual hours

= (4-5) x 8000

= 8000

**Actual Rate = (actual labour cost/ total hours)

Labor Efficiency Thinking = Standard hours for actual production- Actual hours in actual production) x standard rate

= [(1500 units x 6 hours)- 8000 hours] x 4Rs

= 10000 hours x 4

= 40000 Rs

Labour Timeless Variance = Hours worked x Standard rate

= 400 x 4 Rs

= 1600 Rs

Labour mix variance = Standard cost of standard mixing - standard cost of actual mixing

[(1500 x 6) - 7600] x 4 Rs

= Rs 5600

To know more

A direct-labor efficiency variance cannot be caused by: - Brainly.in

https://brainly.in/question/14348569