Standard Costing Labour Variances Calculation at Jamal Mohamed College

The content presents a detailed calculation of labour cost variances, rate variances, efficiency variances, and mix variances using standard labour hours and rates for the production of Article A at Jamal Mohamed College's Research Department of Commerce. The calculations are broken down for skilled, unskilled, and semi-skilled workers to analyze cost and efficiency discrepancies.

• Costing Variance
• Labour Analysis
• Standard Hours
• Production Rates
• Commerce Department

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1. PG & RESEARCH DEPARTMENT OF COMMERCE (SF) JAMAL MOHAMED COLLEGE (Autonomous) Accredited (3rdCycle) with A Grade by NAAC (Affiliated to Bharathidasan University) TIRUCHIRAPPALLI 620 020 SINCE 1951 Standard Costing Labour Variances 1 Dr. E. MUBARAK ALI M.Com., M.B.A., M.Sc (Psy)., M.Phil., P.G.D.C.A., Ph.D. Head & Associate Professor of Commerce Jamal Mohamed College Tiruchirappalli e-mail: mubarakali.jmc@gmail.com

2. Standard Labour Hours and Rate for Production of Article A are given below: Hrs. Rate Rs. Total Rs. Skilled Worker 5 1.50 per Hour 7.50 Unskilled Worker 8 0.50 per hour 4.00 Semi Skilled Worker 4 0.75 per hour 3.00 14.50 Actual Data Rate per hour Rs. Total Rs. Articles Produced Skilled Worker Unskilled Worker Semi Skilled Worker 1,000 units 4,500 Hrs. 10,000 Hrs. 42,00 Hrs. 2.00 0.45 0.75 9,000 4,500 3,150 Calculate: a) labour cost variance c) labour efficiency variance b) labour rate variance d) labour mix variance

3. SH 5000 SR 1.50 AH 4500 AR 200 Skilled Worker Unskilled Worker 8000 0.50 10000 0.45 Semi Skilled Worker 4000 0.75 4200 0.75 17000 18700 I II III IV AH x AR AH x SR SH x SR SH/TSH x TAH x SR 4500 x 2 = 9000 4500 x 1.50 = 6750 5000 x 1.50 = 7500 5000/17000 x 18700 x 1.50 = 8250 Skilled Worker Unskilled Worker 1000 x 0.45 = 4500 1000 x 0.50 = 5000 8000 x 0.50 = 4000 8000/ 17000 x 18700 x 0.50 = 4400 Semi Skilled Worker 4200 x 0.75 = 3150 4200 x 0.75 = 3150 4000 x 0.75 = 3000 4000/17000 x 18700 x 0.75 = 3300

4. a) Labour Cost Variance = III - I Skilled Labour = 7500 9000 = 1500 A Unskilled Labour = 4000 4500 = 500 A Semi-Skilled Labour = 3000 3150 = 150 A 2150 A b) Labour Rate Variance = II I Skilled Labour = 6750 9000 = 2250 A Unskilled Labour = 5000 4500 = 500 F Semi-Skilled Labour = 3150 3150 = 0 1750 A

5. c) Labour Efficiency Variance = III - II Skilled Labour = 7500 6750 = 750 F Unskilled Labour = 4000 5000 = 1000 A Semi-Skilled Labour = 3000 3150 = 150 A 400 A d) Labour Mix Variance = IV - II Skilled Labour = 8250 6750 = 1500 F Unskilled Labour = 4400 5000 = 600 A Semi-Skilled Labour = 3300 3150 = 150 F 1050 F

6. VERIFICATION LCV = LRV + LEV 2150 A = 1750 A + 400 A 2150 A = 2150 A