Material and Labour Variances

1. Following data is available from the records of a manufacturing company:

Standard (per unit)
Materials: 6 kg @ Rs. 4 per kg
Labor: 4 hours @ Rs. 4 per hour
Actual production for the month: 12,500 units
Actual material price per kg Rs. 4.50
Material consumed during the month: 78,000 kg
Direct labor hours worked: 48,000 hours
Actual wage rate per hour: Rs. 3.50

Calculate Material Cost Variance, Material Price Variance, Material Usage Variance,
Labor Cost Variance, Labor Rate Variance and Labor Efficiency Variance.

2. The following details relating to a product are made available to you:

Standard cost per unit
Materials: 50 kg @ Rs. 40 per kg
Labor: 400 hours @ Re. 1 per hour
Actual cost: (For an output of 10 units)
Materials: 590 kg @ Rs. 42 per kg
Labor: 3,960 hours @ Rs. 1.10 per units

Calculate Material Cost Variance, Material Price Variance, Material Usage Variance,
Labor Cost Variance, Labor Rate Variance and Labor Efficiency Variance.

3. The following standards have been set to manufacture a product.

Rs.
Direct materials:
4 units of X @ Rs. 4 per unit 16
6 units of Y @ Rs. 3 per unit 18
Direct labor:
3 hours @ Rs. 2 per unit 6

The company manufactured and sold 6,000 units of the product during the year, details of
direct material and labor cost being:

Rs.
Direct materials:
25,000 units of X @ Rs. 4.20 per unit 1,05,000
36,000 units of Y @ Rs. 2.70 per unit 97,200
Direct labor:
 17,000 hours @ Rs. 2.20 per hour 37,400

Calculate Material Cost Variance, Material Price Variance, Material Usage Variance,
Labor Cost Variance, Labor Rate Variance and Labor Efficiency Variance.

4. The standard cost of the product ‘SLR’ reveals:

Standard materials:
Rs.
2 kg of S @ Rs. 2 per kg 4.00
1 kg of L @ Rs. 6 per kg 6.00
Direct labor (3 hours @ Rs. 6 per hour) 18.00

Actual data:
Direct materials
19,000 kg of S @ Rs. 2.20 per kg 41800
10,000 kg of L @ Rs. 5.60 per kg 56,000
Direct labor:
(28,500 hours @ Rs. 6.40 per hour) 182,400
Actual production was 9000 units

Calculate Material Cost Variance, Material Price Variance, Material Usage Variance,
Labor Cost Variance, Labor Rate Variance and Labor Efficiency Variance.

5. The standard cost card of a product shows the following:

Material cost: 2 kg @ Rs. 2.50 per kg Rs. 5 per unit

Wages: 2 hours @ 50 paise per hour Re. 1 per unit
The actuals which have emerged from business operations are as follows:
Production: 8000 units
Materials consumed: 16,500 kg @ Rs. 2.40 per kg Rs. 39,600
Wages paid: 18,000 hours @ 40 paise per hour Rs. 7200
Calculate appropriate material and labor variances.

6. The standard cost card of a product shows the following:

Material cost: 2 kg @ Rs. 20 per kg
Wages: 2 hours @ Rs. 25 per hour
The actuals which have emerged from business operations are as follows:
Production: 10,000 units
Material consumed: 18,500 kg for Rs. 407,000
Wages paid: 20,500 hours for Rs. 492,000
Calculate Material Cost Variance, Material Price Variance, Material Usage Variance,
Labor Cost Variance, Labor Rate Variance and Labor Efficiency Variance.