Problem 1

A firm gives you the following data:

Standard time per unit 2.5 hours
Actual hours worked 2,000 hours
Standard rate of pay Rs. 2 per hour
25 % of the actual hours has been lost as idle
time.
Actual output 1,000 units
Actual wages Rs. 4,500
Calculate all labour variances.

SH for AO 2500 AO 1000

SR 2
AH 2000
AR 2.25 4500/2000
IT 500

LCV = ( SR*SH for AO)- (AR*AH) = (2*2500)- (2.25*2000) = 5000-4500 = 500 (F)
LRV = (SR-AR)AH = (2-2.25)*2000 = 500 (A)
LEV = (SH-AH)SR = (2500-2000) * 2 = 1000 (F)
IDLE TIME VARIANCE= IDT*SR = 500*2 = 1000

Problem 2
Compute the Labour variances from the information given below:
Standard time 3 hours per unit
Standard rate of wages Rs. 6 per hour
Actual production 700 units
Actual time taken 2000 hours
Actual Wages Rs. 14000
Idle time 50 hours

SH for AO 2100 AO 700

SR 6
AH 2000
AR 7 14000/2000
IT 50

LCV = ( SR*SH for AO)- (AR*AH) = (6*2100)- (7*2000) = 12600-14000 = 1400 (A)
LRV = (SR-AR)AH = (6-7)*2000 = 2000 (A)
LEV = (SH-AH)SR = (2100-2000) * 6 = 600 (F)
IDLE TIME VARIANCE= IDT*SR = 50*6 = 300
 Problem 3
Standard Actual
Wage Wage
No.
Category of No. Total rate Total Total rate Total
No. of No. of of
workers of Labour per Wages Labour per Wages
workers workers hour
hours hours hour (Rs.) hours hour (Rs.)
s
(Rs.) (Rs.)

Skilled 32.00 40.00 1,280.00 30.00 38,400.00 28.00 40.00 1,120.00 40.00 44,800.00

Semi- Skilled 12.00 40.00 480.00 20.00 9,600.00 18.00 40.00 720.00 30.00 21,600.00

Unskilled 6.00 40.00 240.00 10.00 2,400.00 4.00 40.00 160.00 20.00 3,200.00

2,000.00 50,400.00 2,000.00 69,600.00

LCV = ( SR*SH for AO)- (AR*AH)

Skilled = (30*1280)- (40*1120) = 38400-44800 = 6400 (A)
Semi-skilled = (20*480)- (30*720) = 9600-21600 = 12000 (A)
Unskilled = (10*240)- (20*160) = 2400-3200 = 800 (A)
TOTAL LCV = 19200 (A)

LRV = (SR-AR)AH
Skilled = (30-40)*1120 = 11200 (A)
Semi-skilled = (20-30)*720 = 7200 (A)
Unskilled = (10-20)*160 = 1600 (A)
TOTAL LRV = 20000 (A)

LEV = (SH-AH)SR
Skilled = (1280-1120)*30 = 4800 (F)
Semi-skilled = (480-720)*20 = 4800 (A)
Unskilled = (240-160)*10 = 800 (F)
TOTAL LEV = 800 (F)

VERIFICATION
LCV = LRV=LEV
19200 (A) = 20000 (A) + 800 (F)
 Problem 4
Standard Actual
Wag Wag
No. e e
Category of No. of Total Total No. of Total Total
of rate No. of rate
workers worker Labour Wages worker Labour Wages
hour per hours per
s hours (Rs.) s hours (Rs.)
s hour hour
(Rs.) (Rs.)

Highly skilled 30.00 40.00 1,200.00 80.00 96,000.00 40.00 40.00 1,600.00 70.00 112,000.00

Skilled 15.00 40.00 600.00 60.00 36,000.00 10.00 40.00 400.00 65.00 26,000.00

Semi-skilled 10.00 40.00 400.00 40.00 16,000.00 5.00 40.00 200.00 30.00 6,000.00

2,200.0 148,000.0 2,200.0 144,000.0

0 0 0 0

LCV = ( SR*SH for AO)- (AR*AH)

TOTAL LCV = 4000 (F)

LRV = (SR-AR)AH
Highly Skilled = 16000 (F)
skilled = 2000 (A)
Semi-skilled = 2000 (F)
TOTAL LRV = 16000 (F)

LEV = (SH-AH)SR
Highly Skilled = 32000 (A)
skilled = 12000 (F)
Semi-skilled = 8000 (F)
TOTAL LEV = 12000 (A)

VERIFICATION
LCV = LRV=LEV
4000 (F) = 16000 (F) + 12000 (A)