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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.

Answer» ECT labour variance is 5600 RsExplanation:We are given that: RATE = Rs.4/hour Actual cost of production = 1500 units Time = 6 hours Hours taken = 7600 hours Idle Time = 400 hours Total hours = 8000 hours Direct Labor Cost Variance = ( ST × SR ) - (AT - AR)                                                  = (9000 x 4) - (8000 x 5)                                                  =  4000  Rs.ST= Standard Time = 1500 units × 6 hours                                             = 9000 units.(ii) Direct Labor Rate Variance = AT(SR - AR)                                                   = 8000 ( 4 - 5)                                                      = 8000 Rs. (iii) Direct Labor Idle Time Variance = IT × SR                                                           =400 × 4                                                           = 1600 Rs.  ( This is UNFAVORABLE)(IV) Direct Labor Efficiency Variance = SR(ST- AT)                                                           =4 (9000 - 7600)                                                           = 5600  Rs.


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