Accountancy, asked by dharmaleakash3, 5 months ago

. Standard hours for manufacturing two products M and N are 15 hours per unit and 20 hours per unit respectively. Both products require identical kind of labour and the standard wage rate per hour is Rs. 5. In the year 2020, 10,000 units of M and 15,000 units of N were manufactured. The total of labour hours actually worked were 4,50,000 and the actual wage bill came to Rs. 23,00,000. This includes 12,000 hours paid for @ Rs. 7 per hour and 9,400 hours paid for @ Rs. 7.50 per hour, the balance having been paid at Rs. 5 per hour. You are required to compute the labour variances.

Answers

Answered by tejas9193
2

Explanation:

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Answered by madeducators11
2

Labor variances

Explanation:

I) Labor Cost Variance = Standard labor cost for actual production - Actual

                                                      labor cost

                                     = Rs. 22,50,000 - Rs. 23,00,000

                                     = Rs. 50,000

Note: Standard labor cost for Actual Production is computed as under,

Product M = 10,000 units x 15 hrs. per unit x Rs. 5 per hr.

                  = Rs. 7,50,000

Product N = 15,000 units x 20 hrs. per unit x Rs. 5 per hr.

                 = Rs. 15,00,000

∴ Standard labor cost for Actual Production = Rs. 7,50,000 + Rs. 15,00,000

                                                                         = Rs. 22,50,000

II) Labor Rate Variance = Actual Hours (Standard rate - Actual rate)

             12,000 (Rs. 5 - Rs. 7) = Rs. 24,000 (A)

              9,400 (Rs. 5 - Rs. 7.50) = Rs. 23,500 (A)

              4,29,100 (Rs. 5 - Rs. 5) = nil

      Total Labor Rate Variance = Rs. 47,500 (A)

III) Labor Efficiency Variance = Standard Rate (Standard time - Actual time)

                                Rs. 5 (4,50,000 - 4,50,500) = Rs. 2500 (A)

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