Calculation Labour Variance

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MASTER OF COMMERCE – M.Com Second Year (MCO) Solved Assignments for July 2019 and January 2020 Admission Cycles

MCO Tutor Marked Solved Assignment

Course Code : MCO – 05
Course Title : Accounting for Managerial Decisions
Assignment Code : MCO-05/TMA/2019-20
Coverage : All Blocks

MCO – 05 : Accounting for Managerial Decisions Solved Assignment for 2019-20

Question 2. 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. Direct Labour Cost Variance: Rs. 4,000 (A)
2. Direct Labour Rate Variance: Rs. 8,000 (A)
3. Direct Labour Idle Time Variance: Rs. 1,600 (A)
4. Direct Labour Efficiency Variance: Rs. 5,600 (F)