Illustration 14. The planning budget of labour force of Bhatia Ltd. for producing, icle X in one week is : 40 men at 60 paisa per hour for 40 hours = Rs. 960 20 women at 40 paisa per hour for 40 hours = Rs. 320 10 boys at 30 paisa per hour for 40 hours =Rs.120 Rs.1,400 The actual labour force employed during a week was : 35 men at 60 paisa per hour for 40 hours =Rs.840 20 women —_at 40 paisa per hour for 40 hours = Rs. 320 10 women at 50 paisa per hour for 40 hours s. 200 5 boys at 30 paisa per hour for 40 hours =Rs. 60 Rs.1,420 _ Analyse the Labour Variances,Basic Calculation Table SH AH Men [40x40 = 1,600 hrs.) 35 x 40= 1.400] 2,800 x 32 = 4,609 RSH Women |20x40= 800 hrs.) 30x 40= 1,200) 2,800 x 290° = 899 4 Boys |10x40= 400M] 5x 40= 200) 2.800% 2 = 409 2,800 hrs. 2,800) 2,800 Analysis of Labour Variances Standard Cost ~ Actual Cost 3s. 1,400 - Rs. 1,420 = Rs. 20 Adv. (2) Rate Variance = Actual Hours Paid (Std. Rate ~ Actual Rate) Only 10 women have been paid a rate which differs from standard rate and as 40-hours week is in operation, 400 hours is the actual time which has been thus paid, So, Rate Variance = 400 (40°p. -50 p.) =Rs. 40 Adv, (3) Efficiency Variance = Std, Rate (Std. Hours - Actual Hours Worked) Men —_:60 p.(1,600 -1,400) = Rs. 120 Fav. Women :40 p.( 800-1,200) = Rs.160 Adv. | Rs. 20 Fav. Boys :30p.( 400~ 200)=Rs. 60 Fav. (4) Mix Variance = Std, Rate (Revised Std, Hours ~ Actual Hours Worked), (1) Cost Variance 5.160 “| Rs. 20 Fav, Boys :30p.( 400- 200)=Rs. 60 Fav. (S) Revised Efficiency Variance = Std, Rate (Std, Hours ~ Revised Std. Hours) Men :60 p. (1,600 ~1,600) Women :40p.( 800-800) Boys :30p.( 400- 400) = .V. + Eff. V. s. 40 Adv. + Rs, 20 Fav, and Eff. V.=M.V,+R. Eff. V. or Rs. 20 Fav. = Rs, 20 Fav, + Nil NilMlustration 15, The budgeted labour force for a certain process is : Rs, Skilled men Rs, 800 hours at Re. 1 Per hour = 800 Semi-skilled men 1,600 hours at 90 P. per hour = 1,440 2,400 340 240 During a certain week the actual labour force was : = Ra Rs, i 1,200 hours at 95 P. per hour = 1,140 n ie men 1,800 hours at 90 P. per hour = 1,620 2.000 2,760 Calculate labour variances. -vu gation" ® Wings : RSH = Skilled Men : 3,000 800/ 2,400 » 1,000 jor Semi-skilled Men : 3,000 x 1,600/ 2,400 = 2,000 Calculation of Labour Variances itandard Cost ~ Actual Cost = Rs. 2,240 ~ Rs, 2,760 = Rs, $20 Adv, (2) Rate Variance = Actual Hours Paid (Std, Rate ~ Actual Rate) Skilled :1,200(Re.1—Re, 0-95 Semi-skilled :1,800(90 p.-90 p,) 60 eat Rs. 60 Fay, 63) Efficiency Variance = Std, Rate (Std, Hours ~ Actual Hours Worked) Skilled (1) Cost Variance :Re.1( 800 1,200) = Rs, 400 Ady, Semi-skilled :90 p.(1,600 ~1,800) = Rs,180 wal ResOw'Agsy, (4) Mix Variance = Std. Rate (Revised Std, Hours ~ Actual Hours Worked) Skilled :Re.1(1,000 ~1,200) = Rs. 200 Adv. Semi-skilled :90 p. (2,000 -1,800) = 5.180 a Rs. 20 Ady. (5) Revised Efficiency Variance = Sid, Rate Std, Hours ~ Revised Std. Hours) Skilled :Re.1( 800 -1,000) = Rs. 200 Adv. Semi-skilled : 90 p, (1,600 - 2,000) = Rs, 360 Adv. Verification : ] Rs, 560 Adv. C.V.=R.V. + Eff. V. Rs. 60 Fav. + Rs. 580 Adv, M.V.+R. Eff. V. Rs. 580 Adv. = Rs, 20 Adv, + Rs. 560 Adv, or andOF Revou nurs Illustration 16, Particulars regarding a job to be completed in 30 weeks are given low - Standard Actual Category of No. of Weekly Wage No. of Weekly Wage Workers Workers Rate per worker Workers Rate per worker Rs, Rs. Skilled 75 60 70 710 Semi-skilled 45 40 30 50 Unskilled 60 30 80 20 ! me work was actually done in 32 weeks, Calculate various labour variances. olution ; Basic Calculation Table _SB SemNet Ilustration 16, Particulars regarding a job to be completed in 30 weeks are given below - Pee TT ee fen eye eee Standard Actual Category of No. of Weekly Wage No.of Weekly Wage Workers Workers Rate per worker Workers Rate per worker Rs. Rs. Skilled 15 60 10 0 Semi-skilled 45 40 30 50 Unskilled 60 30 80 20 The work was actually done in 32 weeks, Calculate various labour variances. Basic Calculation Table a [tt worker weta]SA] 80 | Actual ww [AR] Ae_| ,35,000|70 x 32 = 2,240] 70} 1,66,800) & x 5,760 = 2,400Calculation of Labour Variances (1) Labour Cost Variance = Standard Cost - Actual Cost = Rs. 2,43,000 ~ Rs, 2,56,000 = Rs. 13,000 Adv. (2) Labour Rate Variance = Actual Worker Weeks (SR - AR) Skilled: 2,240 (Rs. 60 —Rs, 70) = Rs. 22,400 Adv. Semi-skilled: 960 (Rs.40—Rs,50) =Rs. 9,600 Adv. | Rs. 6,400 Ady, Unskilled + 2,560 (Rs. 30—Rs. 20) = Rs. 25,600 Fav. (3) Labour Efficiency Variance ‘= SR (Std. Worker Weeks - Actual Worker Weeks) Skilled: Rs. 60 (2,250 - 2,240) = Rs. 600 Fav. Semi-skilled : Rs. 40 (1,350 - = Rs, 15,600 Fav. | Rs, 6,600 Ady, Unskilled Rs. 30 (1,800 ~ 2,560) = Rs. 22,800 Adv. (4) Labour Mix Variance = SR (Revised Std. Worker Weeks — Actual Worker Weeks) Skilled: Rs. 60 (2,400 - 2,240) = Rs. 9,600 Fav. Semi-skilled : Rs. 40 (1,440 - 960) = Rs. 19,200 Fav. |x 9,600 Fav, Unskilled .: Rs. 30 (1,920 - 2,560) = Rs. 19,200 Adv. (8) Labour Revised Efficiency Variance SR (Std. Worker Weeks - Revised Std. Worker Weeks) Skilled = Rs. 60 (2,250 - 2,400) = Rs. 9,000 Adv, Semi-skilled : Rs. 40 (1,350 - 1,440) = Rs. 3,600 Adv. | Rs. 16,200 Adv. Unskilled —_: Rs. 30 (1,800 - 1,920) = Rs. 3,600 Adv. Verification : L.C.V, = L. R. V. + L. Eff. V, or Rs, 13,000 Ady. = Rs, 6,400 Adv. + Rs, 6,600 Adv, and L. Eff. V. = LM, + LR, Eff, V, or Rs, 6,600 Adv. = Rs. 9,600 Fav. + Rs, 16,200 Adv,32. 100 skilled workmen, 40 semi-skilled workmen and 60 unskilled workmen were to work for 30 weeks to get a contract job completed. The standard weekly wages were Rs. 60, Rs. 36 and Rs. 24 respectively. The job was actually completed in 32 weeks by 80 skilled, 50 semi-skilled and 70 unskilled workmen who were paid Rs. 65, Rs. 40 and Rs. 20 respectively as weekly wages. Find out the labour cost variance, labour rate variance, labour mix variance and labour efficiency variance. (Answer : C.V, Rs. 8,800 Adv,; R.V. Rs, 10,240 Adv.; Eff. V. Rs. 1,440 Fav.; Mix V. Rs, 19,200 Fav.; R, Eff.V. Rs. 17,760 Adv. )38. Following information relating to labour hours and rate is available from the books of a company : Standard Actual Skilled labour 500 hours at Rs. 2 per hour 540 hours at Rs. 2.50 per hour Unskilled labour 200 hours at Re. 1 per hour 230 hours at 90 paisa’per hour Skilled workers remained idle for 20 hours, Calculate the following labour variances : (@) Labour Cost Variance (b) Labour Time Variance (c) Labour Mixture Variance (d) Labour Rate Variance (e) Idle Time Variance. (Answer : C.V, Rs. 357 Adv. T.V. Rs. 70 Adv; M.V. Rs. 15,72 Fav. R.V. Rs. 247 Adv; LTV. Rs, 40 Ady,; R.T.V, Rs, 85.72 Adv.) vay36, A contract job is scheduled to be completed in 30 weeks with a labour complement of 100 skilled operatives, 40 semi-skilled operatives and 60 unskilled operatives. The standard weekly wages of each type of operatives are : skilled Rs. 60, semi-skilled Rs. 36 and unskilled Rs. 24. The work is actually completed in 32 weeks witha labour force of 80 skilled, 50 semi-skilled and 70 unskilled operatives and the actual weekly wages rates are Rs. 65 for skilled, Rs, 40 for semi-skilled and Rs. 20 for unskilled labour. Analyse the variance in labour cost due to various reasons. (Answer : LCV Rs, 8,800 Adv., LRV Rs. 10,240 Adv., LEV Rs. 1,440 Fav., LMV Rs. 19,200 Fav., LYV Rs. 17,760 Adv.)