Question

z ltd has furnished the following standard cost data per unit of output. direct kabour 5hr at rs. 7.50 pre hour. direct wages paid rs. 203500 for 27500 hr. actual output 4,900 units. the labour rate variance is​

Answer 1

Answer:

2750 (a)

Explanation:

Actual= (203500/27500) – 7.5  

7.4-7.5= -0.1

-0.1 x 27500 = 2750 (a)

Answer 2

Given:

Standard direct labor rate per hour = Rs. 7.50

Actual direct labor hours worked = 27,500 hours

Actual direct wages paid = Rs. 203,500

Actual output produced = 4,900 units

To find: Labour rate variance for Z Ltd.

Solution:

Labour rate variance = (Actual labor rate - Standard labor rate) x Actual labor hours

Actual labor rate = Actual direct wages paid / Actual direct labor hours worked

= Rs. 203,500 / 27,500 hours

= Rs. 7.40 per hour

Labour rate variance = (Rs. 7.40 - Rs. 7.50) x 27,500

= Rs. -2,750 (Favourable)

Therefore, the labour rate variance for Z Ltd. is Rs. -2,750 (Favourable). This indicates that the company paid a lower rate for labor than the standard rate, resulting in cost savings.

A favorable variance is generally considered to be a good thing, as it means that the company is able to produce goods at a lower cost than anticipated. However, it is important to analyze the variance in the context of other factors, such as the quality of the output produced, to ensure that the lower costs are not achieved at the expense of quality.

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