Standard Labour Cost for production of 40 Units of a Product X is 30 hours of skilled
Question:
Standard Labour Cost for production of 40 Units of a Product X is 30 hours of skilled labour @ Rs 60/hr and 90 hours of unskilled labour @ Rs 20/hr. 40 units of Product X were indeed produced. Skilled Labour Wage Bill was for 20 hours @ Rs 55/hr and the Unskilled Labour Wage Bill was 130 hours @ Rs 24/hr. A machine breakdown occurred owing to which both categories of the workforce lost 9 hours each. They were however paid for this time.
1. Construct a table clearly highlighting the standard labour hours and rates and actual labour hours and rates
2. Determine the Labour Cost Variance and split this up in to Labour Rate and Labour Efficiency Variance
3. Determine the Labour Yield, Labour Mix and Labour Idle Time Variance
4. State your observations and draw the necessary inferences